With The Many changes within the Ontario Mortgage industry, I have received inquiries as to how some of my clients should move forward with the mortgages on their existing properties. For many, careful consideration is being made with regards to selling and purchasing a new property for valid reasons. Will they qualify for the new mortgage? Can they actually purchase a property considering the market in the GTA and the bidding wars?  For those who may be still the consideration process, I have outlined some factors to consider when moving forward with regards to refinancing.  

1: Although rates have risen, they are still lower than credit card options.

Many clients could use funds for a wide variety of reasons and acknowledge that credit cards often create a downward borrowing spiral that many would rather avoid. Credit card interest rates generally rate from 11% to as high as 29% with the interest being charged on the balance monthly. I have often seen clients attempt to utilize credit cards to further goals, but the cost of borrowing usually creates financial burdens that are always best to be avoided. I always remind my clients that mortgages have much lower rates than credit cards with the interest being charged semi-annually. Over the course of your loan, the savings tend to be worth it for the client. A strong part of financial literacy are lending products that save you as much interest as possible. Although the advice may seem boring or even repetitive, the reason for this is simple: the financial wheel with never require any redesign. My happiest clients are always those with minimal debt, dependable income sources, and a financial plan that garners results. I have never seen any other method work. I urge all to create and maintain a financial plan that will lead them to success.    

2. Your existing equity can be used to renovate your property.

With the current real estate market experienced in the Greater Toronto Area during 2017, many purchasers decided that this was not the ideal time purchase for many reasons, all of which I respect. If you are more of a cautious person like myself, I completely understand and respect little appreciation for risk. Clients look for new properties to downsize, to raise a growing family, or even to obtain the property they have always dreamed of. For many, this dream was placed on hold, but all hope is not lost! Many clients have extended the time frame in their existing home by renovating their properties to suit their changed needs. Often times, a refresh or renovation can create a more efficient usage of the existing space and create a haven that you rush home to return to daily. I pride myself on my personal creative abilities and often times, the solution that we require in our homes is not a move, but rather a gut! Updating your washroom or kitchen can create a wonderful space that allows you to feel at home in new ways. I always urge clients to consider this even if they want to purchase something new. All does not have to be lost in your existing property and sometimes a simple visit to Ikea can remind us of that. Regardless of what people say of their kitchen cabinet quality.    

3. The funds can be used toward live events.

Many homeowners have raised their children in their homes and are now getting married, pursuing advanced education, or even are looking for properties of their own! A great way to assist with this to obtain equity from your home to cover the costs of this. I often encourage to consider this option as long as the understanding and the objective is clear. For many parents, I know that there is fear that the marriage may fail, the education may not be completed, or other reasons that I would never dismiss. Ensuring that your child is responsible is critical and also something that I always suggest a family thoroughly explore. But I have encouraged parents who have children attending medical school to consider this option as in the long run, the education provided the ability to change the quality of life for the family as a unit. A long term look at things is always suggested and recommended.    

4. Consolidating existing consumer debt usually lowers payments.

Sadly, many of us have fallen victim to purchasing items on credit cards. Often times because it seemed like an excellent idea at the time. But three years later when we still have an outstanding balance and no memory of what we purchased, we begin to realize that the interest we are paying could truly be utilized for greater purposes. I am convinced that credit cards were created by an evil being - one who shares the bait (shoes, electronics, make up, clothing or any other vice.), conveniently hiding the hook! I have seen clients save as much as $1000.00 per MONTH through combining their existing credit card accounts into their mortgage. $1000.00 per month could be the difference between an annual family vacation or even eating out on a regular basis. Often times, the little treasures in life obtain little appreciation as we perceive them as unable, believe we need a raise before we can enjoy more out of life, or other factors that prevent us from living our best lives yet. Albeit most of us will not become multi millionaires and that does not have to be the objective of all. Much joy can be found is the simple treats in life and assisting families with this has truly become one of the most enjoyable parts of my job. Families that spend time quality time together stand a better chance of staying together. Consolidating debt is worth considering if it could mean that a parent could quit a part time job and be home. I will always consider this to be one of lives' greatest success stories.    

5. Equity can be used for investment purposes.

Many clients use the equity from their homes to invest in second mortgages, additional properties often earning rental income, to trade on the stock market, or other ventures that are in line with their overall goals. Refinancing your home can allow many families to create income potential improving your quality of life. With many Canadians unable to secure permanent, full time positions, methods to generate income and wealth have to be reassessed as I do not ever foresee the employment climate ever looking like the years behind us. The wrong time to consider income generation is when you are desperate as it often limits your options. Although investments can be risky and clients should ensure that they seriously considered their options, there is most likely an opportunity that will be suitable for you as long as you are prepared to ride the waves and commit to the required process. Creating wealth through that is important to many clients and your mortgage professional most likely has relationships with other professionals that you may consider for your investment needs. It is worth a least a conversation to see if there is a fit that makes sense for you. If your risk tolerance is low, your mortgage professional can assist you in the process of purchasing a income producing property as well. The point is, there are options that can be discussed and weighed.