I recently was helping a client to compare the difference between a standard rate vs. a low rate mortgage. Some low rate mortgages have restrictions that you must know before deciding.

Below is what I have calculated for my client:

Now, the main question is:

“Is the savings of $313/year (or $26/m in interest) worth potentially paying for a higher mortgage penalty if you decided to move or sell the property?”

Depending on your preference, the answer maybe it’s worth it or not worth it. It’s always good to look at the whole picture before deciding on what mortgage product you want to have.

If you want comparisons like this, please don’t hesitate to contact me!

Warmest regards,

Andy Wai

T: 778-323-9449

E: Andypywai@gmail.com

This is a unique time…

With the pandemic from COVID 19 causing disruption to the economy and our daily lives, most lenders have stepped up and offered 6-month mortgage payment deferment programs on a case-by-case basis.

Before deciding on taking a mortgage payment deferral, I wanted to show you the good and the bad of mortgage payment deferral. Let’ talk about the bad first!

The BAD

Lenders have yet to confirm if the 6 months mortgage payment deferral offers will be interest-free or not. If it is not interest-free, your mortgage balance can add up quickly!

Assume the following:

• mortgage balance: $442,800
• mortgage payment: $2,050/m ($1,023 principal + $1,027 interest)

By deferring 6 months of payments, the principal portion is not paid down and the interest portion is added onto your balance. Here are the results after 6 months.

• MORTGAGE BALANCE (no payment deferral): $437,600
• MORTGAGE BALANCE (with payment deferral): $449,000

That is a difference of $11,400 in your mortgage balance after 6 months!

Please note, the calculations are estimates and rounded. The intention is to provide you with an idea of the impact payment deferral can have on your mortgage balance.

The GOOD

Mortgage payment deferral is a common program from lenders – but deferral for 6 months is unheard of! Here are the good with payment deferral:

• use your extra cash to spend on essentials (ex: grocery)
• avoid defaulting and losing your home

Personally, the two reasons above do justify taking the mortgage payment deferral. However, if you have the cash flow to maintain your mortgage payments, you will be better off in the long run.

Stay safe everyone.

Andy Wai, Mortgage Specialist

DLC Clear Trust Mortgages

Tel: 778-323-9449

Email: Andy.wai.mtg@gmail.com