Benefits of Short Term vs Long term mortgages

Westboro Home for sale 499 Highcroft – $569,900.
5 bed 4 bath and with a direct entry garage
walk to the Westboro village shops and services

Current as of Tuesday Dec 22, 2010

                   Bank Rate           Rates I like

Closed                 3%                    2.25%

1 Year Closed    4.30%               2.35%
2 Year Closed    3.85%               3.00%
3 Year Closed    4.15%               3.19%
4 Year Closed    4.94%               3.49%
5 Year Closed    5.19%               3.74%
7 Year Closed    6.30%               4.45%
10 Year Closed  6.75%               4.99%

Mortgage Rates in Ottawa :
Buying a house envolves a long period of borrowing to pay it off. Here are some thoughts on how to borrow and not get burned.
A number of people choose a long term mortgage of 3 to 5 years because they want something stable that matches their salary pay date and ability to afford. They reflect, now that they have a house they want peace. This strategy may be fine for the first few years but think what might happen if you had a change of plans. Let’s say you need to sell the house; job transfer, marriage break up, ouch! need a bigger home for the growing family, yes, the mortgage rates rise of you loose an income source or you receive an inheritance, what then?

Banks will try to adapt to your new direction. They will carry the mortgage to a new home. That’s called porting a mortgage from the existing home to the new one. If there is a pay out before the anniversary they will charge a penalty of unpaid interest due to them. This amount could be as much as 6 months of interest and fees. Can you imagine having to pay $5,000 interest to settle up the mortgage agreement? This scenario would occur when you want to sell your house and you’re not buying another one. The bank could also carry the mortgage to a new purchase where you need more money. Then they will blend the different interest rates into one new rate on the balance. Ask how they have arranged the blending and ask if there are additional fees tacked into the blended rate! Don’t be surprised!

I like to be on a personal rapport level with my bank representative. So meeting with them more frequently a week before the mortgage renewal date is a good thing. I like to review my net worth profile and ask if there is any words of wisdom they might have that I can pass on to my valued clients. A short term mortgage may be a good thing.

Call now for an opinion on your situation. It pays to ask questions and then make up your own mind.

Another Episode of Watch Your Money!

Fraud Watch: Count Your Money  Episode 2

This just in. It’s a true story about one  of my clients who’s Ottawa home I recently sold. People in the habit of receiving cash directly for the bank teller take note; Count your money!

Here’s the scenario. Senior gentleman regularly visits the bank just before 10 am to receive $400 cash from the teller. He likes to exchange a word with the young teller. He likes the attention. She smiles and counts out the cash, compiles it, and with a tap she passes the withdrawal to the client. She smiles, makes eye contact. She wishes him a good afternoon. She knows he is in the habit of placing the money directly into his wallet without counting. He smiles and leaves the bank.
This scene repeats itself week after week and the senior is happy to wait for his favourite teller to serve him, in fact he knows her work schedule so that he can make his withdrawals on her shift. He loves to see her friendly smile. It makes his day!

Yesterday, the senior receives a call from the bank manager asking him to come into the branch office for a special meeting. The manager sits across from his big desk and tells the senior gentleman that a teller has been flagged.  She has been shorting changing customers. The manager calculates $1,400 is owing!
Incredulous, the senior refuses to accept that he has been defrauded of any money. He’s concerned his favourite teller will be dismissed or worse yet, face a jail term. Only after the manager describes in detail each occurrence with dates and amounts withheld does the gentleman begin to accept the deceit. It’s all on video says the manager. This incident has been kept within house by the manager so that it doesn’t go public and draw attention to the bank name, at least so far. Corporate image to protect, know what I mean?

The bank manager offers the senior a cheque for $1,400 to cover his shortfall. Makes you think differently about the automatic bank teller. I thought they were more likely to miss a twenty here and there. In fact the automatic tellers have an accuracy of 99.9 % and they deliver 24 – 7. But, the smile is missing!
So why then do I count the bills I get from the automatic teller and not those I receiver from the human teller? Watch the video and watch your money!