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5 Mortgage Tips For When Your Mortgage is Up for Renewal!

How does it feel, like just another day? Your mortgage is down; your net worth is up; what else can we ask for?

Well, how about some more mortgage tips that help you get the most out of your upcoming renewal?

There is much more to your mortgage than just being an obligation or a massive debt hanging over your head.

A mortgage is a tool that can help you grow and expand your net worth like no other investment vehicle that the average Canadian has access to. I know, I just compared a mortgage to an investment, but bear with me; this is important.

Your mortgage helped you buy your home that has grown in value over the years. You get the full value of the appreciation of your home on day 1 of homeownership before you have even paid off the home.

In the investment world, this is called leverage. No other investment vehicle provides the amount of leverage you get from buying a home. This fact, as well as a portion of your mortgage going towards principal, is why a semi-recent census report (2017) showed homeowners’ net worth was 90 times* higher than comparable non-homeowners.

I know that on so many levels, that statement is both evident and oversimplified. Still, the point is that homeownership, no matter the burden, or headache, leads to you having a stronger overall financial picture and more substantial net worth. So you can thank your modern-day mortgage for that.

However, there’s more.

Soon, your mortgage is coming up for renewal, and it’s game time.

So here is what I would recommend, take stock of your goals, figure out what you need to achieve those goals and start getting ready to take action.

Here’s why now is the time.

Big decisions take time to put into action, there is the knowledge you need to gain and things that need to be done, and in the Real estate world, nothing happens overnight.

Here are five exciting strategies that I think you need to start reviewing now so that by the time your mortgage is up for renewal, you a) will be ready to pull the trigger or b) know that they are just not for you.

1. Consider making your mortgage interest tax-deductible!

I will let you know upfront that this is extremely easy to do, but it can initially appear to be complicated. To make it work, you need to build a non-registered investment portfolio while you are paying down your mortgage and have to track two monthly transactions every month to a “T” to stay onside with CRA.

Don’t worry; it’s worth it, and as I mentioned, it’s easy once you get rolling, but you need to ensure you set everything up right and to do that, you will need to learn ahead of time to determine if it’s the right move for you.

2. Consider buying a rental property!

You are reaping the benefits of leverage with your current home, and nothing is stopping you from doing it again. Rental properties can be a fantastic addition to any investment portfolio and are the start of true investment diversification.

Rental properties are not for everyone, but in my opinion, they should be.

3. Consider topping up your RRSPs!

There are tonnes of debates going on right now about investing in RRSPs vs Non-Registered Investments or RRSPs vs TFSAs. Still, at the core, no financial advisor will fault you for considering using some of your equity to top up your investments.

I do my best to remind all my clients that when they wait to invest, they don’t lose the money they would earn in the first year; they lose the money they make in the last year.

Add into that the RRSP refunds and or offsetting interest deductions for non-registered investments, and the benefits quickly outweigh the interest costs.

4. Debt Consolidation is almost a must!

If you have non-mortgage debt (credit cards, lines of credit, car loans, etc), consolidating that debt into your mortgage is almost a no-brainer when done correctly. The reason most people shy away from debt consolidating is the fact that they spread the new total debt back out over 25 years and end up paying more interest over an extended period.

But if you consolidate and set your mortgage payments to be the same as you were paying when your debt wasn’t in your mortgage, you can make the consolidation work to your advantage, sometimes even paying your entire debt and mortgage off completely years sooner than would have been possible by keeping everything separate.

5. Now is the time for Renovations!

It’s been five years since you last did your mortgage, and if renovations are needed, now’s the time. Adding renovation costs to your mortgage is easy, and since most projects cost so much, it’s hard not to require some financing to make it through.

So don’t be afraid; roll up your sleeves or hire a contractor to get the work done, but let your mortgage do the job of carrying your debt at the lowest possible interest rate!  

I don’t mean to say I told you so, but as you can see, all of these options require research, knowledge and planning, but all of them can have immense value to you and are worth the effort.

Maturity time is a critical time; remember, once you sign your renewal agreement next year, you will likely be locked in again for another five years.

So invest some time in yourself!

Learn the ins and outs of any or all these strategies, recommendations or ideas (or whatever you want to call them) and be prepared to know that you did the most you could with your renewal.

Hey, you may even turn your home and mortgage into a tool that is helping you build your net worth and financial stability.   

Questions, Questions, Questions… If this post sparked questions, which I hope it did, call me, and let’s chat and work at getting you any additional information you may need to make the best decisions for your situation.

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