Thursday, February 16, 2012
Saving Money on your Mortgage: Dual Benefit of a Low Rate
So you got ultra lucky and managed to secure a 3.29% fixed 5 year mortgage on your recent home purchase. This incredibly low rate is a consequence of our recent years of economic uncertainty and it is bound to increase in the years to come.
A great way to avoid the shock of the rate change later on is to use the low rate as a double benefit in paying down your mortgage.
Act as if you had a higher rate today and save yourself thousands of dollars in interest costs.
An example: Using a $400,000 mortgage with 30 year amortization and comparing a 3.29% to a 4.29% rate. This would be a common scenario for an average single family home purchase in Calgary.
The difference in payment is about 13% or $224 per month. Monthly payments based on 3.29% are $1745 vs a payment of $1968 if the rate was 4.29%.
If you prepare yourself now by opting to raise your regular payments by 13% (using the privileges within the mortgage contract) to $1968 per month you will actually save $21,000 in interest costs which equate to 5.5 years off the mortgage amortization.
Not sure if you can make the change? Add the extra $224 per month into a savings account and put down the lump sum payment on your mortgage once you are comfortable with the payments. If the extra $224 is a challenge, then you know now that you will need to make financial adjustments when your mortgage term expires if rates are higher.
If you want to know all of your options in paying down your mortgage faster, speak to your mortgage advisor.
Numbers supplied by Allan Bowerman, Senior Mortgage Planner, The Mortgage Alliance Company of Canada-S&R Mortgage Group
Wednesday, February 8, 2012
New Interchange at Stoney Trail and Nose Hill Drive project
Driving down Stoney Trail from Tuscany today I noticed the new signs up for the Stoney/Nose Hill Interchange. Folks at the south corners of Tuscany and Scenic Acres will soon start to see some of the initial work for this project. Completion is slated for fall 2014.
There will be a temporary detour down to Bearspaw Dam Road during construction as well so a couple different phases ahead. I'm sure it will be an adjustment for a while, but will be a great additition to the transportation improvements in the outer NW area.
For site information, plans, updates and info can be found on the Government of Alberta Transportation Project site for the Stone Trail / Nose Hill Drive Interchange.
For a detail of stages, elevations, etc check out the Independent Functional Review Presentation.
Friday, February 3, 2012
Are you self employed and considering a home purchase?
If you are self employed and reviewing a future home purchase, you need to speak to your mortgage broker to get the ball rolling before you fall in love with a property.
The previous methods for qualifying look to be changing and 'stated income' may no longer be possible. You may be required to provide much more information about your income especially if your T4's do not reflect it.
What does this mean to you? Paperwork and a potentially longer qualification time if you have to get the assistance of your accountant.
Financial Post Article regarding the trend - Feb 2, 2012
Wednesday, February 1, 2012
January Calgary Real Estate Market Update - Stability is the word of the day
The January numbers were released from CREB this morning with some minor fluctuations in single family as well as condo stats.
Although the number of sales has dropped a bit since last January, the reduction in inventory and new listings is pushing us towards a balanced market. As previously seen, condos are lagging a bit in the move, but are also moving toward balance.
Some new condo developments have adjusted to the market by presenting product in lower price points (and sizes).
There are pockets of areas where inventory is quite low and well priced and presented homes are getting snapped up within hours/days of going on market. Specifically, the $450,000 - $549,999 category saw a significant jump in January. If you are waiting to list your home for sale, this may be the year to list earlier as you may be able to take advantage of low inventory pockets.
It is interesting to watch the movement trends both on a micro level with my own clients and across the city. City plans, transit/bike and transportation options, schools and accommodation, buying power, and year of design and style preferences drive the market in ways that overall stats just don't show. Review per community, zone and price point reveals the finer details.
I am curious to see how the demographic change in our city will affect the type of property styles that are in demand (condo, villa, townhouse, bungalow, 2 storey, etc.) and how the availability of immediate possession spec homes from new home builders will drive buyer expectations.
This is the time of year lots of folks start looking as they prepare for a spring/summer move. People are playing a bit of wait and see and the weather can dictate timing and motivation. We are continuing to see migration to Calgary from across Canada and other parts of the world. This is helping to push the rental market and if the trend continues we will see the predictions of increasing sales and prices in the numbers as a tighter rental market motivates folks towards home ownership.
The average price and median price numbers continue to move about and make great headlines but a deep look at sales numbers show they are somewhat misleading. Average price can easily be swayed by sales in the higher/lower price categories that change 'average price' but not the resale value of an 'average home'. In February, CREB will begin discussing the MLS Home Price Index (HDI) to report statistical information and that should provide more clarity to the market than 'average price'.