Saturday, March 29, 2008

Spring-cleaning your debt could save you thousands

Wouldn’t spring-cleaning be so much more gratifying if – somewhere under dusty barbecue parts and outgrown hockey skates – you found an envelope with, say, $5000 in cash? Wouldn’t that make spring-cleaning worthwhile? Of course it would!

Well, you may not uncover a financial windfall when you’re cleaning the garage this spring, but a little time and attention to the task of spring-cleaning your financial house can be very rewarding. This spring, dust away the cobwebs and take a hard look at your debt servicing costs.

Are you continuously carrying a large monthly balance on your credit card? Or are you making regular use of your overdraft protection at the bank? Worst of all, could it be that you’re carrying a balance on a high interest department store card? Take some comfort in knowing that you’re not alone. However, this particular kind of financial clutter – ongoing, unsecured consumer debt – is both confusing and costly. Guess what? It’s time to spring-clean your debt!

Begin by making a quick list of any loans, credit cards or other unsecured debts. In addition, make a note of the interest rates charged on any outstanding balances. Finally, do a quick calculation of what you have paid in debt servicing costs this winter. Has the tax man sent you a bill? Don’t forget to include that debt in your spring-cleaning project.

Next, take a look at the going mortgage rates, and make an appointment with a mortgage professional. By rolling your other debt into a mortgage-either new or existing-you can reduce the number of payments you’re making each month, you can save big on interest charges, and you can improve your cash flow.

How much difference will it really make? Well it can be as good – or better – than finding the $5000 envelope of cash in your garage. Why? As an example, if you have a $160,000 mortgage at 5.99%, high interest credit cards and other loans of say $33,000; your total monthly payment could be $2,014.

Now if you took that $193,000 and added on an approximate $3,000 penalty (if necessary) to refinance your mortgage, you may be able to potentially roll that $196,000 into a 5.35% mortgage (OAC, rates subject to change) that could reduce your overall monthly payment to $1,150. That’s a monthly savings of $835.

Your monthly payment has been reduced, you’re saving on interest charges, and all of your high interest credit card debts are gone. Imagine if you funneled some of that cash flow back into your mortgage!

If you have equity in your home -- preferably more than 25% equity – you may want to consider taking advantage of attractive mortgage rates and rid yourself of your financial clutter. Regardless of where you are in the life of your mortgage, talk to a mortgage professional who can analyze your situation and outline your spring cleaning options.

So as you polish the windows, shake out the carpets and clear out the garage, don’t forget the most rewarding task of all: spring-cleaning your debt. Your financial house will enjoy the fresh beginning, too!


Ontario Mortgage Team
Mortgage Intelligence Inc.
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Wednesday, March 5, 2008

Bank of Canada lowers overnight rate target by 1/2 percentage point to 3.5 percent

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of one percentage point to 3 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 3 3/4 per cent.

Information received since the January Monetary Policy Report Update (MPRU) indicates that economic growth in Canada through the four quarters of 2007 was broadly in line with expectations. Domestic demand has remained buoyant, as rising commodity prices and high employment have continued to support income growth. Canada's net exports weakened further in the fourth quarter, reflecting the slowing U.S. economy and the impact of the past appreciation of the Canadian dollar. Overall, the Canadian economy remained above its production capacity at year-end. Core and total CPI inflation – at 1.4 per cent and 2.2 per cent, respectively, in January – have also been consistent with the Bank's expectations.

At the same time, there are clear signs that the U.S. economy is likely to experience a deeper and more prolonged slowdown than had been projected in January. This stems from further weakening in the residential housing market, which is adversely affecting other sectors of the U.S. economy and contributing to further tightening in credit conditions. The deterioration in economic and financial conditions in the United States can be expected to have significant spillover effects on the global economy. These developments suggest that important downside risks to Canada's economic outlook that were identified in the MPRU are materializing and, in some respects, intensifying.

The Bank now judges that the balance of risks around its January projection for inflation has clearly shifted to the downside, and, as a result, the Bank is lowering the target for the overnight rate. Further monetary stimulus is likely to be required in the near term to keep aggregate supply and demand in balance and to achieve the 2 per cent inflation target over the medium term.

The Bank will publish a new projection for the economy and inflation, including risks to the projection, in the Monetary Policy Report on 24 April 2008.

Information note:

The Bank of Canada's next scheduled date for announcing the overnight rate target is 22 April 2008.

For more information and an unbiased view on where rates are headed visit: