Apr 03, 2017
If you are seeking a new mortgage, or have a mortgage that is coming up for renewal soon, then this article is for you.
The debt business has been a huge growth sector within the financial services profession for several years. There are a number of reasons for this:
Debt products (mortgages, lines of credit, credit cards) are available through a wide range of financial institutions with many options. So many that, at times, it is difficult to determine if you are receiving fair value.
Today, the difficulty is not necessarily in being able to acquire credit (or debt), it is: How do you make a good financing decision amongst such a broad range of options?
A commonly overlooked and under-emphasized area of financial planning is debt management. This may be in part due to the history of the lending business, which was traditionally the territory of major financial institutions such as banks and trust companies. In most cases, individuals seeking loans would have simply dealt with the financial institution with whom they had their bank accounts, and either accepted the “posted rate” or negotiated a slightly lower rate.
Today, the lending business has become very competitive. As such, your ability to reduce your debt servicing costs and increase your flexibility has never been better, due these competitive forces.
Since mortgages represent the largest component of one’s consumer debt, it is in this area where financial planning can have the greatest impact and result in significant long-term interest savings.
By taking a financial planning approach to securing a mortgage and with the assistance of a mortgage broker, you can save time researching your options, attain professional and specialized advice and secure a competitive mortgage without any additional cost to you.
The following is a summary of our Debt Management service that we can provide:
The benefits of following this process are that:
Take the following example (based on mortgage rates at the time this article was written): Mortgage Amount: $300,000 to be paid back over 25 years
Average 5 Year Posted Rate: 4.64% compounded semi-annually
Average 5 Year Broker Rate: 2.69% compounded semi-annually
Mortgage rates courtesy of Mortgage Intelligence.
Result: Using the rate negotiated by a mortgage broker could save approximately $5,729 in interest in year one, or assuming the same rate differential over the life of the mortgage, the savings balloon to approximately $93,418!
Before you acquire or renew your mortgage, ask yourself if you are really getting the best value for your money.
Should you have any questions or wish to explore this further, just contact your Rogers Group Financial (RGF) advisory team.
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