Annual Mortgage Statements Explained
You just received your Annual Mortgage Statement: Don’t just file it…. When your annual mortgage statement comes in the mail (usually by end of February), you may just glance at the balance and file the document in your “house” file until next year. The thought is that it’s locked in and there is nothing to do anyway, so you put it away – out of sight and mind. We are all thinking about getting our personal taxes in order, and it seems less urgent to look at the mortgage. But don’t just put it away until next year-the information in the statement includes your balance, rate, payment, interest paid for the year, and your future renewal date. Here are the things you want to pay attention to:
Balance: have a look at where you started, and most importantly, what is your house now worth? What is the equity position you are in: Value-Balance=Equity…that number should be growing! Now that you have that number, is there equity in your home that you can capture at low rates to use toward higher interest rate debt? Rate: have you looked at current rates? Yours may seem “fine”, but an interest rate differential can mean years off your mortgage. For example, if your rate is 3.39%, and current rates are 2.74%, that’s .65% savings…almost $2000/year difference in interest. Talk to me about getting your hands on the best rate, even mid-term! Payment: what are you paying each month? Is that still working for you? Are you able to pay bi-weekly and accelerate your pay down? You may be in a position now to increase your payment, or make a small lump sum payment. Ask me what the significance is of even little additional amounts. Interest paid for the year: Unfortunately this is often the one we see and don’t like and makes us sigh and put the notice in the file to forget! We Canadians don’t have the good fortune of writing off our home mortgage interest like our friends in the south do, but there are factors to consider, especially if this house is, or will be converted in the future to a rental property. Future renewal date: Don’t leave your mortgage running without review until the renewal date. That’s just a number on a calendar, and mid-term is an important time to have a good look at where your mortgage stands compared to the market. Bottom line! Don’t leave your mortgage “unattended”! It needs constant attention, and we are here to help you with options and decisions throughout the life of your mortgage. Like in a game, it’s not what the score is for each period that’s important, it’s what the final score comes out looking like! Let’s have that chat!!