Vancouver Real Estate and the Episode of the 15% Foreign Buyers Tax

Many of our Team Andruff clients want to know what the impact of the 15% Foreign Buyers Tax will be. One month in we are on a quest to find an appropriate answer. We listen to economists, review similar instances and rely on our experience to guide our clients and here is what we see so far:

Blog at a glance:

  • Markets were cooling before the tax was instituted.
  • We have seen a similar scenario with the transition from GST/HST – the market will adjust and rebound.
  • Higher end homes (one-million-dollars-plus) will be slowed down – Resale condo market still robust.
  • The fundamentals of supply have not changed while demand is on the sidelines in some cases but not in others.
  • BC Government was politically motivated to make this move but foreign buyers will have ways around the 15% tax and this may push affordability problems to other markets.
  • A strong Greater Vancouver and BC Economy with continued in-migration will still make Vancouver’s affordability a challenge over the long run.

 

The Rest of the Story

On an anecdotal note, leading up to summer, there was a sense of a turn in the market. The market was taking a more “traditional approach” or what would have been a more typical response to a hard press in pricing than what we had seen in the last few years of accelerated prices. There was some seasonality to the market where people took a step back and simply enjoyed their summer (which a few years ago was normal).

The Senior Economist with Central 1 Credit Union, Bryan Yu, indicated the tax will put further downward pressure on a market that already had a slowing, after a very strong spring. He further prognosticated the new tax on foreign buyers will cause a substantial but temporary 10 per cent drop in Metro Vancouver sales that will extend into 2017.

This is not unlike the transition from the GST to HST scenario in 2010.  The market pulled back to see what would happen and then slowly returned to business as before.

We again get back to the tale of two markets (foreign and domestic). What we are seeing today is the higher end of the one-million-dollar-plus homes are slowing considerably (mainly affected by foreign money).  While my experience over the last month is the resale condo market (read local market) remains fairly robust.  The reasoning behind this is many (of course not all) foreign buyers were more involved in the higher end of the market and the new construction coming to market.

The 15% tax therefore is having less impact on the…let’s say…one-million-dollars-or-less type of properties, (mainly condos and mainly “locals”) and so we are still seeing things move at a fairly strong pace.  The fundamentals of supply and demand are still driving the resale condo side of the market for the most part.

 

I dare say that The Foreign Buyer Tax was not all that well conceived. It appears to be a political, knee-jerk response by the BC Government. Dr. Sherry Cooper, Chief Economist for Dominion Lending Centres share this sentiment stating, “Housing affordability is a hot-button political issue, so it is not surprising that the B.C. Government, facing an election in less than a year, has felt compelled to do something to dampen the fervor.”

A few of the flaws as I see it:  It will have a mushrooming effect on non-Metro-Vancouver areas like for example Kelowna, and Victoria on Vancouver Island. By pushing the foreign money further out from Metro Vancouver, this potentially is passing the buck and creating affordability issues in these other areas too, perhaps even as far away as Toronto. Also, some of the buyers of presale condos are finding local friends or family members in order to assign their contracts, and hence sidestepping the 15% tax.

At the end of the day, some foreign funds will still be invested in the Vancouver Real Estate market. They still can and will.  For now, there will be a shock to the system.  Arguably the market is naturally correcting already which is good and healthy for the market.  Remember there are always two sides to the story, and while Sellers have had their turn with a Sellers’ Market, now Buyers may see some opportunity. As density remains a focus at city hall and in-migration remains a reality with a strong local economy both in Greater Vancouver and BC, the underlying lack of affordability will likely remain.  However, at this time the pace of the market will be slower.

Vancouver Real Estate Numbers are Being Manipulated by the Liberal Government

I think it’s pretty clear to see that Mike de Jong and the Liberals are “Gerrymandering” or foregin buyersmanipulating the numbers to suite their agenda and get a good head line.  Since when was 3 weeks in the month a good measurement of time. June 10-29th clearly is cutting out the most active period of time that Vancouver Real Estate transactions happen (the beginning and end of the month.) Oh and by the way, the BC Land Titles Office is closed on weekends so Saturday’s and Sunday’s don’t count for evaluating when transactions are recorded so by starting on the 10th (a Friday) it makes the sample size of days look bigger but they really just padded their timeline. As well, why only look at June when March, April and May are much stronger months for sales?  The government has the data why not give a larger sample? This is very hollow attempt to look at numbers and I think it’s pretty plain to see the Liberals are doing everything but look at the Elephant in the room when it comes to Vancouver Buyers and the Foreign Investor. They are trying to say that Foreign Buyers are only 3% of the market when it’s really more like 10% or possibly even more according to the recent Business in Vancouver article. Mike de Jong and the Liberals are controlling the message due to conflicts of interest like Bob Rennie being the campaign fund raiser for the Liberal party and it is wrong.

Will the Vancouver Real Estate Bubble Burst in 2016? Part 1

Who wants to talk about Vancouver’s current favourite subject?!

Many people I talk to all want to know, “If I buy now will there be a bubble? They say this can’t last for ever…” (And it won’t). “Things have to change don’t they? Should I buy, sell or just give up?”
Well, I love the topic of Vancouver Real Estate and often talk all day about the ideas swirling around this subject. There are several pieces and parts we want to look at. So to avoid a long-winded essay on the topic, I have broken down the idea into five shorter installments that will be released over the next few weeks.
In the first installment I will cut to the chase and start off by noting, I don’t believe there is a bubble and I am on record saying this as early as 2010 in my previous blog entitled, Debunking the Bubble.
What I will share with you is simply my experience and knowledge as a Vancouver Realtor. Yes, I make my living by helping people buying and selling homes, which is why I can share with you the “behind the curtain” point of view of what is going on. My opinion is based on experience rather than just making a sensational headline. I will also point out that as a leading edge Millennial, many of my friends and clients are looking at the affordability of Vancouver, and how to work within the current framework of this issue. So this topic hits close to home (pardon the pun) and is something that I help people with everyday.

Part 1 of 5: The Economics.

To start with, I feel it’s important to look at the basic ‘Economic 101 {factors} of Supply and Demand.’ Before we get into the economics, let’s get “the lay of the land” on a quick geography lesson.
The lower mainland Metro area is a collection of twenty-two municipalities. In reality it is not just Vancouver that is being affected, but the over-all region, which has seen a tremendous demand for housing. Mark Twain quipped, “Buy land, they’re not making it anymore.” When it comes to Vancouver we are abundantly aware of our special restrictions. We have mountains to the North, water to the West, the USA Boarder to the South and Agricultural Land Reserve (ALR) to the South and East. So there is not a lot of room to expand. We have sprawled out as far as we can. Hence, we can agree the supply of land is geographically restricted. The result is that we are now going up. We are building higher density and as old houses get knocked down for town homes and condos, the landscape is changing. Okay nothing new and many of you don’t need a Geography lesson so what are we talking about Real Estate wise.

It is estimated that 30,000 people will be moving to Vancouver every year and will need somewhere to live. The graph below compares the number of listings in April 2015 vs April 2016, and the percentage of change:

Area  2015 2106 % change
DT 728 354 -51%
VWS Houses 681 552 -18%
VWS Attached 894 398 -56%
VES Houses 327 389 -19%
VES Attached 510 186 -63%

In many cases over the last year we have seen a striking decline in the housing inventory on the market, coupled with large buyer demand – outpacing the available inventory. What does this mean when we go back to our ‘Economics 101 of Supply and Demand?’ When there is a shortage of supply, prices go up. I know this is not rocket science but as long as there are more people looking to buy into this market than there are options available to buy, the prices become subject to upward pressure. When looking at the numbers, in this context prices are not dropping nor is the bubble bursting.

(Here are the recent BCREA numbers put forward by Cameron Muir.)

So you’re going to say, “Okay, but it’s not that simple!” At the very basic level it is but your right there is so much more to it. What about all the Macro economic factors? Well, you will just have to read the next blog when we get into that!

Look for Part 2 Coming out Wednesday Morning!

Money Strategies to Help You Buy Vancouver Real Estate Sooner

Pay yourself firstHave you ever heard the expression house rich and cash poor? When living in and around Vancouver it can certainly feel that way sometimes.  Often I talk with people that have space issues… Either they want to own a space or need more space!  Here is an excellent tip on how to feel less house rich and cash poor when it comes to buying and moving up to that next place in Vancouver.

One of the suggestions I give to people that are either renting or looking to move from a condo or townhouse to a house…is to “test drive” their next mortgage.  Let’s say your current mortgage (or rent) is $1,000 a month and you want to buy up to a home that would have you paying a larger mortgage, say $2,000 a month.  When your mortgage/rent is due each month trying, by paying the $2,000 ($1,000 towards your mortgage/rent and $1,000 to a high interest savings account). These days it is really easy to set up an automatic withdrawal savings plan (this is known as paying yourself first).

This may be a huge shock to your personal, financial and social system… at first! This will do two things for you.  First, it will help you save up more of a down payment and help you reach that goal of OWNING more space sooner. Secondly, it will allow you to try out your future financial reality without having the downside of risk.  In other words, you will be able to test how the “new” (higher) mortgage feels in terms of your life style so you can evaluate if it is a realistic expectation. Alternatively, one could always scale things back, saving less per month, and taking longer to be financial ready to make your move.  Looking on the bright side, you won’t be defaulting on any payments and this will help reduce your risk in the future.

Finally, when you do make your next move, you will already be acclimatized to the payments and will not have to go through the shock of higher payments as you have already been doing that for some time. This allows you to buy with confidence and remove some of the worry out of the equations.
If you want some help figuring out future mortgage payments, check out top mortgage broker sites, such as Kyle Green’s by clicking here, or feel free to get in touch with me and I would be happy to help!

Fixed or Variable Mortgage???

Fixed vs VarriableIt May Be Time to Rethink your Mortgage in Vancouver

Fixed rates help you sleep at night, but variable rates are making a strong case, for consideration when securing a mortgage!

We have been advised from the Bank of Canada (BOC) for an extended period of time that rates will soon be going up, however the rate hike will not be punitive or significant. The BOC has now finally come to grips with the fact that this rhetoric has been ringing hollow.

The most recent BOC meeting confirmed that the overnight lending rate will remain the same at 1%, keeping the prime rate at 3%.For the first time, in a long time, they have hinted that this will be the norm for an extended period.

With inflation and growth well below their targets and unemployment rates over their target of 6.5% (and the current Canadian unemployment rate is 7.1%), it is not really much of a surprise that the BOC is acknowledging our current economic circumstances. With a weak economic first half of 2013, the BOC has readjusted their inflation targets to 2% which will likely mean we will not see a rate hike until the later part of 2015.

With the variable rate likely to stay constant for a “moderate time period,” property owners or buyers may see value in going with the lower variable rate and keeping the option open to lock in down the road to capture some significant savings.

Fixed rate mortgages are tied to the bond rate. Brand name Canadian banks are currently trending fixed rates at about 1.7% above bond yields. (Currently, in December 2013, as this article is written, rates are at 3.39%).  So lets run some quick numbers.

If you were to talk with a top mortgage broker tomorrow (and I would be happy to recommend one) you will find that banks are offering variable mortgages up to prime minus 0.4% or prime minus 0.5% (which would be 2.5% – 2.6%). When comparing this to the above mentioned current 5 year fixed rate (3.39%), you can see the savings of 0.79% which the market will likely follow.

Looking at a $500,000 mortgage, at a 5 year term, and 25 year amortization period, your payments would be $2467 for the fixed rate (3.39%) and $2265 for your variable rate (2.6%), the difference being $202. If for 2 years (until prime were to go up, say in 2015) you choose to “accelerate” your payments by opting for the variable rate, but paying the fixed term rate (in other words paying down the principal of the mortgage an additional $202 dollars a month), you would take 4.9 years off of the total term of your mortgage. This will help you get ahead over the long term! Talk to a professional about your options today!

Rate Update – What is happing with Mortgage rates in Vancouver and BC?

Rate UpdateAs a Vancouver Realtor® one of the questions people love to ask me is “What are rates doing?” “What is going to happen with rates?” “I know you can’t tell the future but what do you think is going to happen over the next year?” Well, one of my best sources for learning about rates and what they are going to do is listening to economists. They British Columbia Real Estate Association (BCREA) provide information on economic news relevant to rates. Here is what they had to say around the Bank of Canada Interest Rate Decision – September 4, 2013

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank highlighted that an uncertain global economy is delaying an expected rotation of growth in Canada toward exports and investment. This means that the burden of economic growth will remain on households at a time when most households are deleveraging and looking to slow consumption. All of this adds up to a Canadian economy that will grow below trend in 2013, likely at a rate of around 1.5 per cent.  Below trend growth will translate to continued subdued inflation, which the Bank anticipates will return slowly to its 2 per cent target in 2014. As for the Bank’s tightening bias, language around the withdrawal of monetary stimulus has been significantly moderated. The Bank anticipates a gradual normalization of policy interest rates as conditions for inflation, growth and household debt normalize.
Rising long-term Canadian interest rates, along with somewhat soft economic growth through the first half of 2013, have taken some urgency out of future monetary policy tightening. In particular, higher long-term rates will further slow growth in household debt via higher mortgage and other key lending rates which will allow the Bank to push increases in its overnight out to late 2014 or early 2015.

Source BCREA: Copyright British Columbia Real Estate Association. Reprinted with permission. BCREA makes no guarantees as to the accuracy or completeness of this information.

Unlocking the Equity in Your Home.

Taking money out of your homeIn some cases it is okay to treat your home as an ATM.

House rich, cash poor. And now you need some cash?

Here is how to generate income out of your home.

In the business of real estate I hear a lot of clichés. My home is the biggest investment I ever made. My home is my castle. Well you get the idea. Many Canadians want to remain living at home. Are you feeling: House rich, cash poor? Did you know it is possible to tap into the wealth that is invested in the value of your home? So when it comes to the golden years or you just need help in getting ahead of the tax man, here are some ideas on how to use the equity you have built in your home.

Tips to Access the Equity in Your Home.

 

A) A reverse mortgage

A reverse annuity mortgage or home equity plan are both similar strategies. The idea on these plans is to pull equity as a mortgage out of the debt free portion of the home, in either a lump sum or monthly payment, for a set period of time. Once the home is sold the mortgage plus accrued interest must be paid. In the mean time no payments are required and any residual equity of course would flow through to the seller or an estate. It is best to talk to a financial advisor to learn what your options are and what would work best for you.

B) Renting out a part of your home.

Perhaps you have a basement that could be turned into a rental suite. Ensure your municipality allows this option. Some areas may or may not allow this type of arrangement but often time it can be a great way of creating wealth without taking away from your equity.

 

C) The use of a property manager

This can simplify things so you don’t have to worry about finding and dealing with the tenant and residential tenancy rules. However, this still provides the ability to collect passive income. (Often time your rental income can be off set by your household expenses leaving a zero taxable income, but it is advisable to get professional accounting advice on this mater.)

 

D) Home Stay Students

Some students will pay up to $750 a month for a bedroom and private bathroom, including picking them up at the Airport, feeding them, and including them in your family activities. Depending on what level of commitment you prefer, this could be an interesting way to make a few extra dollars.

 

E) Operate a business out of your home. This sure can cut down on your commute time! It also could cut down on your overhead, create supplemental income and assist in lifestyle choices. There are various details to discuss first with your accountant to stay “on side” for items such as PST and GST remittances, and what you can and cannot write off.

As well, talk with your insurance broker. An existing standard home policy does not usually cover business endeavours and you may be exposed to undue liabilities that should be covered. Often the benefits of running a home-based business will out way the risks. Take the extra steps and do some homework. Consider reading, “A Home Inc.: The Canadian Home Based Business Guide,” by Douglas and Diana Gray.

How to get ahead with new mortgage rules!

If you are you still “stretching” or “saving up” to buy into the Vancouver real estate market? Here are some tips!

stretch-your-dollar

At first glance, the new mortgage rules appear to be stretching some people right out of their targeted housing market. However, a great young mortgage broker pointed out the silver lining in the new mortgage rules. If you will be making a down payment anywhere from 5% to 19.9%, with the new rules, you will be paying down more principle in 25 years than you would have paid in a 30 year amortization period according to the previous rules (which means less interest paid to the banks or mortgagor). I know this is a cold consolation if you can’t even get into the Vancouver market! Here are some tips for those of you working and saving hard to reach your goal of buying into the Vancouver real estate market and helping you once you get there.

Pay your-self first!

 

Many books have talked about this, for example: The Wealthy Barber, and The Richest Man in Babylon. Here is the basic idea: For each and every pay cheque make sure to save a portion of it off the top before doing anything else with the money. Many banking institutions like Tangerine and Ally (go to https://www.tangerine.ca/en/index.html or http://www.ally.ca/en/index.html) have accounts with better interest rates than the traditional banks, which sometimes advertise “high interest savings accounts.” It is possible if desired, to set up an automated savings plan to regularly transfer money to the savings account without fail.

 

Vendor Take Back Financing

In slower markets there is more opportunity for Vendor take back financing. Essentially the seller provides a private mortgage out of their own equity for all or part of the funding to the buyers. This may eliminate some or all of the need to borrow from the bank or mortgage companies. You still pay interest and still buy the house but it is more like buying a car with financing provided by the dealership instead of your bank. This type of lending may not work for all sellers but it doesn’t hurt to ask the question!

Talk to your family and close friends about buying real estate.

Often times they will have been through the process before and may be able to provide valuable advice. From a financial side I am not necessarily suggesting you ask for charity but they may be able to help loan funds at a better rate than the bank, especially if you need just a bit more to get in the game. (Banks are not offering much in the way of interest on GIC’s, bonds or money market funds these days so setting up a private loan with someone you know could be a win- win situation.) If you do choose to look at creative options like this, it is a really good idea to spend a bit of money on an accountant and use a lawyer to draw up the documents just to keep everything above board and clear for all involved.

Agree on Costs and Write it into the Agreement for Sale Contract

While we are talking about creative ideas, consider writing it into your contract “the costs” related to your property purchase, to help lower your out of pocket expenses. For example, if the seller is really motivated they may pay for your legal fees, or you could ask for them to pay for the inspection?! It is not all that common to do but don’t be afraid to negotiate – just ask the question! It may turn out to be one less expense for you in the long run.

Fixer Uppers

Buying an older home that needs a lot of work may be an option as well. Often older homes can be bought for a discount, or comparatively less money, due to all of the extra work required to up-grade the property. If you are considering buying a property with expectations of renovating it, did you know that you can get a mortgage that will cover the renovation costs? There is a process that needs to be followed so make sure you know a good agent that can work through the particulars with you. The idea here is to buy a home for less and redecorate it the way you would like it!

Revenue Income

 

Once you own a piece of property look for mortgage payment relief in revenue opportunities from your properties. Most people automatically think about a rental suite, but in some area’s storage is highly sought after or maybe parking … so look at renting out an extra parking space, garage or of course the suite to make extra revenue on the latent value in the property.

Budget

Set up a budget! Yes, I know, I know. These are not fun to deal with but if you analyze what you are spending the money on, you may be surprised at where your money all goes! Start by first keeping all your receipts for a month and then you can work out where and how to flow your money.

What is your latte factor?

Review your spending and find your latte factor. This phrase was coined by David Bach in his book called The Automatic Millionaire . I don’t drink coffee but the principal applies to anything. I love pizza so instead of ordering in pizza we buy it at Costco instead. If you eat out for lunch a lot perhaps brown bag it or if you do drink coffee make it at home instead of buying it at your favourite coffee place. Briefly the idea is that if you pay $3.50 a day x 5 day a week ($17.50) x 52 weeks a year that is $910 a year!

Cash is King

Try just paying cash. Credit cards and debit cards are very convenient but I find that I am not all that good with budgets. If I only have cash to spend it helps from over spending because when the cash is gone, it’s gone.

Garage sale Anyone?

Consider having a yard or garage sale – it’s not that difficult. If it is stuff you own that is not being used liberate it and pocket a few extra bucks. Then collect interest instead of dust!!! Also consider selling higher value items on Craig’s List or eBay if you don’t want to practically give it away at a yard sale.

At the end of the day, collectively all of these little creative ideas together start to have a large impact. Mostly what we are talking about is using a bit of smarts, asking a few extra questions and using a bit of discipline. It can be uncomfortable but any place worth going is worth the effort.

If you have any questions or comments please feel free to get in touch with me as I am always here to help.

What YOU Need To Know About Mortgages if You Are Going to Buy a Home in Vancouver

New Mortgage Changes will have an Effect on Vancouver Housing.

The Department of Finance and Federal Regulator is known in short as OSFI (Office of the Superintendent of Financial Institutions) and is an independent agency of the Canadian Government. They are once again changing the rules of the real estate game (when CMHC is concerned) due to growing concern regarding consumers’ debt levels in Canada. Some of these new rules will take effect July 9th, 2012, which does not give affected consumers much time! As is often the case, these new rules will have an effect on some of the people in the market, some real estate investors (especially if you have more than one property), people with credit problems, some first time buyers and the self-employed.

To provide a little context, recent economic conditions (starting in 2008) required the Bank of Canada to keep interest rates low to spur on Canadian economies. As a result, we have been at record low interest rates which have given borrowers/consumers the ability to load up on significant debt, at low rates. Understandably, this has pushed along sectors of the economy, particularly the housing market.

The intention of the low rates was to give the economy a “shot in the arm” but due to global circumstances this has become more of a “normal rate” rather than a short boost. The continued economic woes of the world have the Bank of Canada pinned down and even if they wanted to raise rates they cannot or will not, for fear of what that would do to our domestic economy. Here is the problem: as rates eventually rebound to a truer or normal (higher) rate, many Canadian’s will become over extended. So as the once cheap or affordable debt levels rise, it could push some beyond their means and beyond their ability to repay the debt. This is where the government regulation is attempting to “save” Canadian’s over the long run, by putting together more stringent regulations today to take some of the heat off of the market and soften the blow in the future.

Here are the new mortgage rules effective July 9, 2012:

– Amortization periods will be lowered from a maximum of 30 years to 25 years.  *As of the writing of this article please note that if you are not high ratio (5%-19.9% down) you do not need CMHC to insure your mortgage and you can still get a 35 year amortization with banks like Merix or ING!

– The amount of refinancing permitted on your home will be 80%, lowered from 85% of the home’s value (this make scense because banks do not want you refinancing back into a high ratio mortgage).

– Government-backed insured mortgages (CMHC) will now only be available on homes with a purchase price of less than one million dollars.

– Households are now being restricted to a maximum gross debt service ratio of 39% and maximum total debt service ratios of 44%.

OSFI changes to be implemented by the end of the lender’s fiscal year are as follows:

– HELOCS (Home Equity Lines of Credit) will be limited to a maximum of 65% of the home’s value (formerly 80%).

– Qualifying rates for “Conventional” mortgages will now need to be at the “Benchmark Qualifying Rate” if the term is less than 5 years

This aligns with insured mortgage requirements released in April 2010.

– “Stated Income” programs will be eliminated all together.

– Cash Back mortgages (100% financing) will be eliminated.

(Clients will need a minimum 5% down from own resources or as a gift.)

What’s the bottom line?HAMER

Some people’s pain will be other’s gain.

While the “math hammer” will knock a few buyers out of the running and in the short term the housing market will slow…other well-prepared buyers may be able to find good deals on good properties. So, it is a good time to get off the fence as a buyer and make a deal!!!

Top 10 Tips for Paying of your Mortgage Faster in Vancouver!

Running HouseIf you own property in and around Metro Vancouver these days you know how dear a price you pay to get in the real estate game. When it comes to mortgages, rate is not everything. Rate certainly is one important aspect of your mortgage but re-payment options can be worth thousands of dollars to your bottom line over time and in a city that can be expensive to live in that counts for a lot!

Here are some ways to pay down your mortgage faster:

1) Accelerated Bi weekly payments – You can pay your mortgage monthly, or twice a month or every two weeks. If you pay bi-weekly you will get an extra 2 payments in a year. With 52/2 is 26 payments a year instead of paying twice a month for 24 payments a year. If you get paid every two weeks why not accelerate your payments? For example, say you had a $450,000 mortgage at 3.29% and you went with bi-weekly mortgages instead of paying monthly you would take a 25 year amortization down to 22.1 years (saving you $26,786 in interest payment). Also be sure to look ahead when those extra payments are coming so you don’t get caught off guard having to make that extra payment right at Christmas!

2) Increasing your payment – If you can round up your payments to a higher amount you will be reducing the principle loan down faster which can equate to years off your mortgage over time. For example, say your monthly payment is $777 why not try and stretch yourself to $800 (let’s face it $23 isn’t break the bank). Also, consider that when rates go up you will already be ready for higher payments in the future. Even just $20 a month that will have a significant! ($20 a month will save you $3,266 in interest over the life of a 25 year mortgage at 3.29% or shave 4 months off the end of your mortgage…)

3) Doubling up payments – Banks will often allow you to double up a payment (annually) and again the name of the game is paying down principal faster so if you have a lucky month doubling down consider doubling up.

4) Lump sum payments – Often you are allowed an annual payment equal to a certain amount or percentage of your mortgage. If you’re not able to make small incremental changes to your payments make larger payments on anniversaries or at the end of your term.

5) Found money – is money you were not counting on like birthday money or a bonus at work. You can shave years off a mortgage by unexpectedly attacking the principle when it’s not looking… Every little bit counts even just $100 a year will make a difference.

6) Annually review your mortgage – Even if you are in the first year of a five year term don’t get stuck on auto pilot. Rates are continually on the move up and down. It may be worth refinancing or blending in a new rate to your existing mortgage so give yourself a yearly “check up” as it could mean big dollars over the long haul.

7) Shop around – When you first get a mortgage of course you shop around for the best rate right? What about when the renewal notice comes? It is important that you don’t just re-sign the mortgage when the bank sends you those papers. A simple phone call to a mortgage broker could again save you instead over paying on a higher rate because it was just too easy to just continue on without checking around. One little phone call could be worth a boat load of cash in your account over time.

8) Rise with the tide – Hard work often pays off. When you get recognized for your hard work through a raise or you get a new job making more money put it towards your mortgage. If you were comfortable living before keep your life style the same and increase your mortgage payments. It’s not as fun to save now but being debt free really pays off in the long run.

9) Diversified savings – If you really love to save and max out on some of your prepayment options early you can also contribute more to your RRSP’s to get a bigger tax refund that you can then apply as an annual payment to your mortgage later and get the best of both worlds of saving for retirement and paying down debt in combination!

10) Steady On – When rates drop, keep your payments the same. As stated above, if your happy with your life style why not punch up the prepayment. A drop in rate is the equivalent of upping your payment but it doesn’t cost you any more… How does that sound?

(Talk to your bank or review your mortgage terms to find out if these are options will work for you. If you don’t have these options and you want them be sure to get the full picture from a mortgage professional as to what your options are! I could recommend some great people just drop me a line.)