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Amortization Breakdown and Working from Home

 

Amortization Options

Your mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free as well as how much interest you pay over the lifetime of your mortgage (longer lifetime equals more interest, whereas a shorter lifetime equals less interest but also bigger payments).

Amortization Benchmarks

Let’s start by looking at the mortgage industry benchmark amortization period. This is typically a 25-year period and is the standard that is used by the majority of lenders when it comes to discussing mortgage products. It is also typically the basis for standard mortgage calculators.

While this is the standard, it is not the only option when it comes to your mortgage amortization. Mortgage amortizations can be as short as 5 years and as long as 50-years(interest-only)!

Benefits of a Shorter Amortization

Opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

Benefits of a Longer Amortization

When it comes to choosing a longer amortization period, there are still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

Let’s Chat!

I am happy to help with the decision for the amortization that best suits your unique requirements and ensures you have adequate cash flow. However, it is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You can shorten or lengthen your amortization, as well as consider making extra payments on your mortgage (if you set up pre-payment options), at a later date.

Ideally, you are re-evaluating your mortgage at renewal time (every 3, 5, or 10 years depending on your mortgage product). During renewal is a great time to review your amortization and payment schedules or make changes if they are no longer working for you.

 

If you have any questions or are looking to get started on purchasing a home, don’t hesitate to reach out to me today!

 

 

Making Your Home Workspace More Productive

Fall in love with your home and your workspace again with these tips to help you make your home office space more productive!

  • Establish Boundaries: A key component of being more productive at home is to establish proper boundaries between work and personal life. While not all of us at home have space for a dedicated home office, it helps to create a dedicated area in your house such as your kitchen table. In addition to having a dedicated physical space to create boundaries, establishing when it is time to focus on work versus switching off for the day is key. Establishing norms such as time and location can make a big difference in ensuring productivity, but ensure you have discussed with your manager and/or team about when communication is expected.
  • Create a Routine: This is especially important for individuals who are used to an office setting and whose mornings would consist of showering, breakfast, and commuting. When the commute is off the table, it is just as important to maintain a good morning routine - even if you have the option of more flexible hours. Determine what works best for you to keep you focused and engaged and maintain that routine throughout the week.
  • Declutter: When working at home, you no longer have to account for just your immediate space but the general environment as well. It can be distracting to try and work at the kitchen table when your sink is a mess or the carpet needs vacuuming. Be sure to keep your house as decluttered and tidy as possible to prevent mid-day distractions and to clear your mind to better focus on work-related tasks.
  • Take Breaks: When working in an office, you’ll often be reminded to take your lunch break when the rest of your colleagues are headed out for theirs. At home, it can be a little more difficult to maintain your lunch hour - or take breaks at all! And when we do, often these breaks are little more than scrolling through social media. While taking breaks is vital, a productive break is even more so. Consider reading relevant articles to give you some inspiration, making a home-cooked meal or even taking a walk around your block for a more restful break.
  • Upgrade Your Equipment: Whether you’re currently working in an old wooden kitchen chair or lack proper wrist support, a big step towards being more productive at home is upgrading your equipment. If you’re going to be sitting all day, investing in a comfortable, supportive desk chair that won’t leave you feeling achy will make a huge difference! Also, make sure you have enough desk space to be able to work comfortably and include ergonomic support where applicable for an even more comfortable (and productive!) work-at-home experience.

 

Tracy Bennett at 7:18 PM
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Mortgage Professionals Canada Ontario Housing Update 2024

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https://mortgageproscan.ca/home

Tracy Bennett at 6:49 PM
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Mental Health Month, are you practicing Financial Self-Care?

 

Mental Health Month, are you practicing Financial Self-Care?

 

Dealing with money is part of self-care.   Financial stress can have an impact on everyday life, change the way we approach our relationship with money and have a lasting effect on our overall well-being!

 

Financial self-care involves taking intentional and proactive steps to manage your finances, reduce stress related to money, and foster a healthy financial well-being. Here are some key aspects of financial self-care: 

  • Budgeting: 

  • Create a realistic budget that aligns with your financial goals. 
  • Track your income and expenses regularly to stay on top of your financial situation. 
  • Allocate funds for essential expenses, savings, and discretionary spending. 
  • Emergency Fund: 

  • Build and maintain an emergency fund to cover unexpected expenses. 
  • Having a financial safety net can reduce stress and provide a sense of security. 
  • Debt Management: 

  • Develop a plan to pay off high-interest debts. 
  • Prioritize debt repayment to free up money for other financial goals. 
  • Investing: 

  • Learn about investment options and consider investing for long-term financial growth. 
  • Diversify your investments to spread risk and optimize returns. 
  • Insurance: 

  • Ensure you have appropriate insurance coverage, including health, life, and property insurance. 
  • Review and update your insurance policies as needed. 
  • Financial Education: 

  • Stay informed about financial matters and continuously educate yourself. 
  • Attend workshops, read books, or follow reputable financial blogs to enhance your financial literacy. 
  • Retirement Planning: 

  • Contribute to retirement savings accounts, such as 401(k) or IRA, to secure your financial future. 
  • Review and adjust your retirement plan regularly based on your financial goals and market conditions. 
  • Mindful Spending: 

  • Practice mindful spending by evaluating your needs versus wants. 
  • Avoid impulsive purchases and make spending decisions aligned with your financial priorities. 
  • Negotiation Skills: 

  • Develop negotiation skills to secure better deals on expenses like rent, utilities, or services. 
  • Negotiate for better terms on loans or credit card interest rates. 
  • Self-Care Habits: 

  • Recognize the connection between financial well-being and overall well-being. 
  • Prioritize self-care activities that don't require significant financial resources, such as exercise, meditation, or spending time with loved ones. 
  • Regular Financial Check-ins: 

  • Schedule regular check-ins to review your financial goals and progress. 
  • Adjust your financial plan as needed to accommodate changes in your life or economic conditions. 
  • Seek Professional Advice: 

  • Consult with financial advisors or professionals for personalized guidance. 
  • They can help you make informed decisions and create a financial plan tailored to your needs. 

Remember, financial self-care is an ongoing process that requires attention and commitment. By actively managing your finances, you can build a more secure and fulfilling financial future. If you are feeling stressed due to debt management or higher-interest debts, give us a call and we can walk you through some solutions!

 

 

 

Tracy Bennett at 4:12 PM
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Inflation and how it affects Canadians

 

Inflation and what it means for Canadians: 

 

January 16, 2024

 

The new numbers just came out today for December. Canada’s annual inflation rate rose in December to 3.4% from 3.1% in November. This is down from a 40-year high of 6.8% in 2022. Rising rates have been able to reduce the inflation rate but now the higher mortgage costs are one of the biggest causes for inflation to climb again. Canada’s Central bank is trying to target 2%.  

 

Mortgage interest costs were the largest contributor to higher inflation, going up 28.6% compared with the previous December 2022 as interest rate hikes saw borrowing costs balloon. Increases in the cost of rent, air transport, fuel, and passenger vehicles contributed to the higher December figures. 

 

Canadians are paying 7.7% more for rent in December 2023 than in December 2022. Groceries have risen 5.9% in the past 12 months. A typical family would pay $1065 more for food per person in 2023. The forecast shows 2024 will see changes of 2.5-4.5% for groceries.

 

What is Inflation: 

 

Inflation refers to the percentage increase in the general price level of goods and services in an economy over time. When the inflation rate is positive, it means that, on average, prices are rising. For Canadians, the impact of inflation can be both positive and negative, depending on various factors. Here are some key points to consider: 

 

  • Purchasing Power: Inflation erodes the purchasing power of money. If prices are rising, each dollar buys fewer goods and services. This can affect the standard of living for Canadians, especially if their incomes do not keep pace with inflation. 

  • Cost of Living: A moderate and predictable level of inflation is generally considered normal in a growing economy. However, if inflation is high and unexpected, it can lead to an increase in the cost of living. Essential goods and services, such as food, housing, and transportation, may become more expensive. 

  • Interest Rates: Central banks, such as the Bank of Canada, may use monetary policy tools, including interest rates, to control inflation. If inflation is too high, central banks might raise interest rates to cool down economic activity. Higher interest rates can affect borrowing costs for Canadians, including those with mortgages or other loans. 

  • Savings and Investments: Inflation can impact the real return on savings and investments. If the rate of inflation is higher than the return on investments, the purchasing power of savings may decrease. Investors need to consider the impact of inflation when making investment decisions. 

  • Wage Growth: In an environment with rising inflation, wages need to keep pace with the increase in the cost of living. If wages do not rise at a similar rate, households may experience a decline in real income. 

  • Government Policies: Government policies, such as fiscal measures and social programs, may be influenced by the inflation rate. Governments often aim to strike a balance between supporting economic growth and keeping inflation in check. 

Individuals, businesses, and policymakers must monitor inflation trends and adjust their strategies accordingly. If inflation is well-managed and remains within a target range, it can contribute to a healthy, growing economy. However, excessive or unpredictable inflation can pose challenges for individuals and the overall economic stability of a country. 

 

How does the inflation rate affect the Bank of Canada and its rate decision next week: 

 

An inflation rate of 3.9% can have several implications for the Bank of Canada and its monetary policy decisions. Here are some ways it may affect the central bank:

 

  • Interest Rates: One of the primary tools the Bank of Canada uses to control inflation is the benchmark interest rate. If inflation is significantly above the target range (which is typically around 2% in many developed economies, including Canada), the central bank might consider raising interest rates. Higher interest rates can help cool down economic activity, reduce spending, and bring inflation back to the target range. 

  • Monetary Policy Adjustment: In response to higher inflation, the Bank of Canada may adjust its monetary policy stance. This could involve tightening monetary policy by raising interest rates or using other tools to reduce the money supply. The aim would be to curb inflationary pressures. 

  • Inflation Targeting: The Bank of Canada has an inflation-targeting framework, aiming to keep inflation within a specific range. If inflation consistently exceeds this range, the bank may need to bring it back under control. On the other hand, if inflation is below the target, the bank might consider more accommodative policies to stimulate economic activity. 

  • Exchange Rates: Inflation differentials between countries can influence exchange rates. If Canada's inflation rate is significantly higher than that of its trading partners, it may affect the value of the Canadian dollar. Central banks often consider exchange rate implications when making monetary policy decisions. 

  • Economic Growth: Higher inflation can be indicative of robust economic activity, but it may also signal overheating. The Bank of Canada aims to balance economic growth with price stability. If inflation is driven by excessive demand, the central bank might take steps to prevent an unsustainable boom that could lead to a subsequent bust. 

  • Communication with the Public: The Bank of Canada regularly communicates its monetary policy decisions and outlook to the public. In a situation with elevated inflation, the bank may provide clear guidance on its intentions and the rationale behind its policy actions. This transparency helps businesses and individuals make informed decisions. 

It's important to note that central banks consider various economic indicators, not just inflation, when formulating monetary policy. The goal is to achieve a balance that supports sustainable economic growth while maintaining price stability. The specific actions taken by the Bank of Canada will depend on the overall economic conditions, including factors such as employment, GDP growth, and inflation expectations.

 

We are all hoping to see a hold to future increases, but we must wait and see!!!  House sales saw a bump in December so if you want to buy, now is best as the spring may see more competition and price increases again.  Call to book a review!

Tracy Bennett at 3:11 PM
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Estate Planning and Welcome 2024!

Estate Planning: Are You Covered?

“New Year, new you” may be a cliché but it is for a reason! The New Year always has us thinking about where we are now, and where we want to end up. When it comes to your personal goals, a review of your finances and estate should be at the top of your list. Proper estate planning can ensure that you have a stress-free year knowing you are covered!

 

Is your will up-to-date?

The purpose of a will is to outline your assets and determine how they will be distributed, as well as who will be in charge of managing affairs. Some key components to include in this document are:

  • An up-to-date list of your significant assets; note the location if outside your province or Canada.
  • Who will inherit your assets? And which?
  • Outline where you want assets to pass outside your estate to avoid probate fees (e.g., an insurance policy, an RRSP). Do this via beneficiary designation.
  • If they are minors, do you have a trust or other provisions in place?
  • Is the list of beneficiaries in your will up to date? Have there been recent births, deaths, or marriages in your family?
  • Have you included alternates in case your named beneficiaries predecease you?
  • Do you want to give to charities or other organizations?
  • If you have children, have you indicated a guardian and spoken to them?
  • Did you include an alternate in case the guardian you chose is unable to commit?
  • Have you reviewed your choice of guardian as your child grows older?
  • Your executor will carry out your wishes after you die. You can name one executor or two or more co-executors. Be sure to name one or more alternates as well.

Have you assigned a power of attorney?

Another important (and often overlooked!) aspect of estate planning involves naming a power of attorney. This individual is someone you trust to make decisions for you should you become unable to do so due to injury or illness, whether temporary or otherwise. Power of attorney documents are created for you by a wills and estates lawyer (or notary in Quebec) as part of your estate plan.

 

Do you have mortgage protection insurance?

Through Manulife Mortgage Protection Plan (MPP), you have the opportunity to add a portable insurance policy to your mortgage that helps protect your loved ones and your home should something unexpected happen to you. Unlike bank insurance, MPP is a portable life and disability product that you can take with you, from lender to lender and property to property. This gives you the utmost future flexibility and is unlike bank insurance products which tie you down exclusively to them. To ensure you get the best rate at renewal, you must have invested in an insurance product like MPP that will give you the freedom to move!

 

Mortgage life insurance will protect your family's future by paying out your mortgage should the mortgage holder pass away. Manulife will also make your mortgage payments while your claim is being adjudicated, so there is no added stress for a loved one at an already difficult time. Mortgage disability insurance will take care of your mortgage payments plus property taxes if you become disabled. Disabilities from sickness and accidents are relatively common and will affect 1 in 3 borrowers throughout their mortgage amortization. Manulife provides budget-friendly payment options, the ability to top-up your coverage and so much more.

 

These are all important aspects to consider to ensure your estate and family will be provided for should something happen. While never a fun topic, it is an important one and the better prepared you are, the better off your loved ones will be.

 

I would be happy to discuss coverage with you to ensure peace of mind for your family and their future.

 

Pantone of the Year

As we enter the New Year, it’s always fun to reflect on the previous twelve months and take a look at what is trending as we move forward.

 

If you’re unfamiliar with the Pantone of the Year, it is more than just a colour to paint your walls. Since 2000, the Pantone Colour Institute has been indicating a colour of the year and, for many, this is seen as a representation of the current moment in time helping us to reflect on the culture and state of the world. Think of it like a snapshot in time!

 

For 2024, the Pantone color of the year is “Peach Fuzz”; which is notably a warm and cozy hue to feed and nourish the soul.

 

During this post-pandemic period of turmoil around the economy, mortgage industry, and housing market, many of us are currently in need of more nurturing and comfort. This colour signifies the importance of caring and community even more as we enter 2024.

 

As the calendar turns over, take inspiration from Pantone to make the New Year one of comfort, healing, and peace for yourself and those around you. With interest rates forecasted to drop towards the latter half of 2024, housing and job markets set to stabilize and inflation slowly reducing to normal, we have some stability to look forward to.

 

To ensure you can make 2024 as comfortable as possible, don’t hesitate to reach out to me for mortgage advice. Managing your finances can be a great way to reduce stress and leave time for more important things! Renewals are on the rise, and this can be a great opportunity for you to rebalance your mortgage contract, review your interest rate and terms, and update your payment schedule to make the most of your monthly cash flow.

 

 
 

Tracy Bennett at 7:27 PM
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Tracy Bennett
Name: Tracy Bennett
Posts: 33
Last Post: February 11, 2024

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