Should I Refinance My Mortgage?

It’s the holiday season and thinking about your mortgage is likely that last thing on your mind. However, if you’re sitting with a lot of equity in your home yet can’t seem to manage your debt payments, perhaps thinking about your mortgage is the best thing you can do. With credit card interest rates often pushing the 20% range, five-year fixed-rate mortgages at 2.69% to 2.89% range and variable rates even lower, you may want to consider paying off high-interest debts. Like many financial decisions, you need to look at the big picture. Here’s what you need to know.

A refinance alters the terms and conditions of your mortgage; specifically you are increasing the amount of your mortgage to pay off debt. Your mortgage payment may or may not increase, depending on a number of factors, and you may incur a penalty to break your existing mortgage if you are refinancing mid term, but you will be paying off the refinanced debt at a much lower interest rate, which could save you thousands of dollars in interest in the long run.  Here are some reasons to refinance:

  • Decrease your overall monthly debt payments by using your equity to pay off those high-interest credit cards or unsecured loans, which can help you better manage your budget.
  • You can refinance to purchase another property. Using the existing equity in your home can be a great way to buy a rental property which, if done right, can also make the interest you pay tax deductible.
  • You could also take out some of the equity for investment purposes — an option that many homeowners consider this time of year as they look ahead to the new year
  • And there are more uses for your equity such as helping putting your kids through school.


Remember that borrowing against yourproperty is not free money. You still own the home so the mortgage loan has tobe repaid.

Spending Habits

While using the equity in your home to pay off debt certainly eases financial stress, there may still be challenges. However, some people have experienced a job lay-off or an illness that contributed to their unmanageable debt loads. Make sure you understand what got you into your current situation.

Real Estate Market

Equity measures the fair market value of your property against the balance owing on your mortgage. If you borrow against your property, you may worry that the market will drop and your home value with it. However, the government added a few safeguards over the last few years with respect to refinancing: where once you could refinance up to 95% of the value of your home,  that percentage has dropped to 80% of the value of your home.  By making that change, the government is basically saying it is somewhat confident that house prices will not likely fall far enough for you to lose equity.

Speak to a Professional to Understand Your Options

As you can see there are many factors to consider before deciding to refinance. Each individual’s financial situation is different. Let’s talk about your unique situation and the options available to you.

Call me today!

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Getting behind on mortgage payments? We can help

There are times in our lives when the unexpected happens and we find it difficult to cope financially. It could be a job loss, an unexpected illness, the death of a loved one or separation and divorce. There may be enough money to get by for a few months, but soon many families find themselves overwhelmed as the bills start to mount and household finances begin to dwindle. Then households may start to miss payments to creditors, including a mortgage payment. While a one-time missed payment can easily be dealt with, long term problems may need a different approach.
Consider the following:
  • Missing payments. If there are a few missed mortgage payments, it might be difficult to get a bank loan to pay the arrears. By missing payments it looks as if there might be an issue repaying the loan. There is a difference between a missed payment and a late payment. A missed payment is one that is completely missed and never made up. A late payment is one that’s not paid on time, but made up.
  • How a lender views arrears. Again, it might be a challenge to get a loan when in arrears, especially when unemployed. Lenders may, however, work with clients on a plan to pay the arrears while keeping other payments current.
  • Interest rate for arrears and/or default. Lenders may charge a penalty on the overdue amount. If the lender has to proceed with a Power of Sale, then legal costs are added on top of the penalties. Remember, mortgage payments must stay current and paid when due along with payment for the arrears as per the repayment plan, which includes the penalties.
  • When will the lender take action? Generally, after three missed payments. Some lenders may take action sooner. It’s important to talk to the lender and try to work with them.
  • What can the homeowner do? The longer it’s left, the more bank fees and legal fees get tacked on, which eats into the equity in the property. A mortgage broker with experience in arrears refinancing has access to many lending solutions and may be able to help.
Yes, there is help. To get the best advice, it’s important to speak with a mortgage broker as soon as problems start. One solution may be to refinance to consolidate debt, including the arrears. However, if the default process is in the final stages, and the home is about to be lost, a second mortgage may be an option.
Since every situation is unique, an experienced mortgage broker, who can access funds quickly, can be the difference between keeping a home and losing it. TMG The Mortgage Group has access to a wide range of lending solutions and, in many cases, can resolve the situation effectively.
For a fast mortgage solution, call me today.
Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Review your mortgage at renewal time

Is your current mortgage still competitive? Has there been a change in your job or your family situation? Are you up-to-date on what the market is doing with regard to interest rates? It’s always a good idea to review your mortgage at renewal time to make sure you’re in the best product for your current needs and that it still fits into your overall financial plan. This is a great time to re-evaluate your needs.

Typically, the renewal process starts when your lender sends you a mortgage renewal statement about 30 to 45 days before your current mortgage matures. At that point, you will have to make an important decision. The renewal letter may not give you the best rates available. In fact, these are often higher than the lender’s lowest rate. Negotiating a rate and other privileges can strengthen your financial position.

Too often, Canadians receive their renewal notice and sign on the dotted line without weighing their options. By doing your homework, you can bring yourself one step closer to mortgage freedom.

Here are a few ideas to pay off your mortgage faster.

  • Pay down as much as you can afford on the existing mortgage before renewing.
  • A new mortgage should be tailored to your specific needs and not to the latest headlines.
  • If the renewal rate is lower than your previous rate and you are still comfortable with making these payments, keep the payments the same at the lower rate.
  • If you’re making more money, try shortening the term of the mortgage by paying bigger lump sums each month. This strategy not only cuts the repayment period, it also saves you interest in the long term and pays down your mortgage faster. It’s a great option for those who are financially sound, planning an extended leave or working toward early retirement.
  • Apart from making larger payments, you can also change the frequency of your mortgage payment from monthly to accelerated biweekly or weekly installments.
You may also want to consider refinancing at renewal time. Refinancing frees up cash you may need for debt consolidation, home renovations or investments. So take a fresh look at your future and stay on top of your renewal.

Call me today and let’s review your mortgage.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

August Market Volatility

We are living through interesting times – economically speaking. The latest news surrounding the turmoil in the stock market and a potential “crash” has made some consumers a bit jittery. You may be wondering how what’s happening in the stock markets the will impact your life. Here are a few thoughts.

Let’s put China in perspective. China is considered an emerging market. As such, investing in that country’s growth by purchasing stocks when prices are low, may theoretically net a nice profit. But, like any other investment in the equities market, there is always a risk.  Over the past year, investors have poured more and more money into Chinese stocks.  A classic bubble developed. In June, the bubble popped and the Shanghai index lost about a third of its value before rebounding.

Then China moved aggressively to control the crisis. The government gave money to brokerages to buy stocks and ordered company executives not to sell their shares. The central bank cut interest rates to a record low,  which all led to “Black Monday” (August 24).

If you are a stock market investor, you likely have a portion of your portfolio in emerging markets and you may hold stock in some Chinese companies but foreign investors own only 1.5% of all its shares. Since Monday, stock markets everywhere have rebounded.Now let’s put Canada in perspective. Our stock market has rebounded and it’s back to business as usual, or as usual as it can be, given the times. If you’re an equities investor, that adage “buy and hold” may still apply, but it’s always a good idea to talk to a professional investment advisor.Oil is still volatile but RBC Economics predicts that those provinces that have felt the slowdown will see increased market activity in 2016, which means a return of jobs and increased housing activity. Prices at the pump are down, which is good news for consumers.

The Canadian dollar is now above 75 cents – it dipped slightly below that with all the negative news.

One of the key indicators to look at is job numbers. The latest from Statistics Canada show that employment in Canada is steady and hiring remains steady.
Despite the slowdown in the housing market, home values are holding up.  As for the high debt levels in Canada, people are generally managing it.  According to the 2015 WealthScapes analysis, which was just released, Canadians slowed their pace of borrowing and increased their savings in 2014. Household net worth last year increased 6.1 per cent over the previous year, despite a 2.9 per cent growth in debt, the report found.
As for the housing market, we have historically low interest rates, both variable and fixed.  The Bank of Canada rate is sitting at .50%.  People are still buying houses and getting mortgages. Some economists suggest we will be living in a low rate environment for a while as global economies continue to recover. It’s like turning a big ship around – it takes time.This is all good news for Canadians. That’s not to say that there aren’t still challenges ahead, but it’s clear that Canadians are resilient and are well prepared for whatever comes.I remain at your service for any mortgage-related questions and enquiries.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Index and Sector ETFs: Mutual Funds: Speculation X3

How many of you remember the immortal words of P. T. Barnum? On Wall Street, the incubation period for new product scams may be measured in years instead of minutes, but the end result is always a greed-driven rush to financial disaster.

The meltdown spawned index mutual funds, and their dismal failure gave life to “enhanced” index funds, a wide variety of speculative hedge funds, and a rapidly growing assortment of Index ETFs. Deja Vu all over again, with the popular ishare variety of ETF leading the lemmings to the cliffs.

How far will we allow Wall Street to move us away from the basic building blocks of investing? Whatever happened to stocks and bonds? The Investment Gods are appalled.

A market or sector index is a statistical measuring device that tracks prices in securities selected to represent a portion of the overall market. ETF creators:

  • select a sampling of the market that they expect to be representative of the whole,
  • purchase the securities, and then
  • issue the ishares, SPDRS, CUBEs, etc. that speculators then trade on the exchanges just like equities.

Unlike ordinary index funds, ETF shares are not handled directly by the fund. As a result, they can move either up or down from the value of the securities in the fund, which, in turn, may or may not mirror the index they were selected to track. Confused? There’s more — these things are designed for manipulation.

Unlike managed Closed-End Funds (CEFs), ETF shares can be created or redeemed by market specialists, and Institutional Investors can redeem 50,000 share lots (in kind) if there is a gap between the net-asset-value and the market price of the fund.

These activities create artificial demand in an attempt to minimize the gap between NAV and market price. Clearly, arbitrage activities provide profit-making opportunities to the fund sponsors that are not available to the shareholders. Perhaps that is why the fund expenses are so low — and why there are now thousands of the things to choose from.

Two other ETF idiosyncrasies need to be appreciated:

a) performance return statistics for index funds may not include expenses, but it should be obvious that none will ever outperform their market, and

b) index funds may publish P/E numbers that only include the profitable companies in the portfolio.

So, in addition to the normal risks associated with investing, we add: speculating in narrowly focused sectors, guessing on the prospects of unproven small cap companies, experimenting with securities in single countries, rolling the dice on commodities, and hoping for the eventual success of new technologies.

We then call this hodge-podge of speculation a diversified, passively managed, inexpensive approach to Modern Asset Management — based solely on the mathematical hocus pocus of Modern Portfolio Theory (MPT).

Once upon a time, but not so long ago, there were high yield junk bond funds that the financial community insisted were appropriate investments because of their diversification. Does diversified junk become un-junk? Isn’t passive management as much of an oxymoron as variable annuity? Who are they kidding?

But let’s not dwell upon the three or more levels of speculation that are the very foundation of all index and sector funds. Let’s move on to the two basic ideas that led to the development of plain vanilla Mutual Funds in the first place: diversification and professional management.

Mutual Funds were a monumental breakthrough that changed the investment world. Hands-on investing became possible for everyone. Self-directed retirement programs and cheap to administer employee benefit programs became doable.

The investment markets, once the domain of the wealthy, became the savings accounts of choice for the employed masses — because the “separate accounts” were both trusteed and professionally managed. When security self-direction came along, professional management was gone forever. Mutual fund management was delegated to the financially uneducated masses.

ETFs are not the antidote for the mob-managed & dismal long term performance of open end Mutual Funds, where professionals are always forced to sell low and to buy high. ETFs are the vehicles of choice for Wall Street to ram MPT mumbo jumbo down the throats of busy, inexperienced investors… and the regulators who love them because they are cheap.

Mutual fund performance is bad (long term, again) because managers have to do what the mob tells them to do — so Wall Street sells “passive products” with controlled content that they can manipulate more cheaply.

Here’s a thumbnail sketch of how well passive ETFs may have performed from the turn of the century through 2013: the DJIA growth rate was about 0% per year, the S & P 500 was negative; the NASDAQ Composite has just recently regained its 2000 value.

How many positive sectors, technologies, commodities, or capitalization categories could there have been?

Now subtract the fees… hmmmm. Again, how would those ETFs have fared? Hey, when you buy cheap and easy, it’s usually worth it. Now if you want performance, I suggest you try real management, as opposed to Mutual Fund management… but you need to take the time to understand the process.

If you can’t understand or accept the strategy, don’t hire the manager. Mutual Funds and ETFs cannot “beat the market” (not a well thought out investment objective anyway) because both are effectively managed by investor/speculators… not by professionals.

Sure, you might find some temporary smiles in your ETFs, but only if you take your profits will the smiles last. There may be times when it makes sense to use these products to hedge against a specific risk. But stop kidding yourself every time Wall Street comes up with a new short cut to investment success.

There is no reason why all of you can’t either run your own investment portfolio, or instruct someone as to how you want it done. Every guess, every estimate, every hedge, every sector bet, and every shortcut increases portfolio risk.

Products and gimmicks are never the answer. ETFs, a combination of the two, don’t even address the question properly — AND their rising popularity has raised the risk level throughout the Stock Market. How’s that, you ask?

The demand for the individual stocks included in ETFs is raising their prices without having anything to do with company fundamentals.

What’s in your portfolio?

How will ETFs and Mutual Funds fare in the next correction?

Are YOU ready.

Real Estate versus Stock Investing

Written by Steve Nyvik, BBA, MBA, CIM, CFP, R.F.P.
Financial Planner and Portfolio Manager,
Lycos Asset Management Inc.

Which is a better investment – real estate or stocks?  To really know which is better, one has to make an apples-to-apples comparison.  Let’s look at some of the factors to consider:

1. Debt

Many people who buy real estate borrow to do so.  Borrowing magnifies both the gains or losses. Consider a property with a purchase price of $100,000 where you put down 20%, or $20,000.  Should the property go up by 5%, or $5,000, compared to the $20,000 you put down, your return on investment is 25%.  The same result would have occurred if one borrowed to invest in stocks.  So, if we are to compare real estate to stocks, we have to look at the total purchase cost of each and look at their returns.

2. Real estate closing costs and annual costs

Investing in real estate comes with significant costs in buying or selling.  There are the real estate commissions, legal fees, GST/HST, property transfer taxes, and if you are a high ratio borrower, you might also have mortgage insurance costs.  On top of the purchase cost, you will have annual costs for:

  • property taxes – which include your share for municipality costs like police, fireman, schools, water, garbage, sewage, etc),
  • maintenance costs,
  • strata / HOA fees (if in a condo), and
  • housing related costs (gas, electricity, insurance, telephone, cable/internet, etc).

And you may have costs to advertise for tenants.  If you are renting out your property, then hopefully you will recoup some or all of these annual costs in which case we consider the property net rental income that comes to you.  Some of this income may effectively be shielded through capital cost allowance on the building and other capital items to get the property to where it can be rented.  You will of course have to spend your time to advertise to get renters, interview tenants, set up a trust account for any security deposits, do credit checks, collect rents, pay bills, check to make sure the house isn’t being used to grow pot or make other illegal drugs (or used for other illicit purposes), and be available to renters day or night should they have any problems with your property (like a leaking roof).  You also have the risk that a renter might trash your property or that they might not pay rent and then it may take significant time and legal fees to have them removed.  If you own a property but are not renting, then you have this cost drag on your investment, but you have the benefit of the use of the property – we all have to live somewhere.  Common stocks on the other hand typically do not have annual costs.  Management takes their pound of flesh in their remuneration.  You don’t spend your time to manage the company operations as you do with real estate.  You need to compare net rental income to dividends after factoring the tax preferences of each.

3. Liquidity

Real estate tends to be much less liquid than exchange listed stocks. Sometimes you just can’t sell without a substantial drop in price.  Real estate also suffers from the problem of financial size.  It is difficult to get small amounts of cash out of your investment.  Although a line of credit can be secured against the property to get cash, you still hold the entire investment risk on the property until it is sold.  For a position in Stocks, one has liquidity to be able to sell a few shares to partially liquidate a position and reduce investment risk.

4. Tax advantages

If your real estate is your principal residence, then the gain on sale may be sheltered by your Principal Residence Exemption.  Where your stocks are to be held in a tax sheltered account, then there could be deductions for your contributions and income and gains that could grow tax deferred (eg. RRSP or RRIF investments) or grow tax exempt (eg. TFSA investments).


One can’t generalize and say investing in real estate is better or worse than investing in stocks.  You have to consider the specific investment particulars for each as well as the tax sheltering room and ability of the investor to deal with each type of investment.  If one selects stocks, there is no economic reason why real estate should always appreciate at a higher rate than different types of businesses.  Rather, one should own a home to live in and one should have a “pension” comprised of several types of businesses that provide a stable income to meet ones living needs.

Brave Old World: Market Cycle Investment Management

The Market Cycle Investment Management (MCIM) methodology is the sum of all the strategies, procedures, controls, and guidelines explained and illustrated in the “The Brainwashing of the American Investor” — the Greatest Investment Story Never Told.

Most investors, and many investment professionals, choose their securities, run their portfolios, and base their decisions on the emotional energy they pick up on the Internet, in media sound bytes, and through the product offerings of Wall Street institutions. They move cyclically from fear to greed and back again, most often gyrating in precisely the wrong direction, at or near precisely the wrong time.

MCIM combines risk minimization, asset allocation, equity trading, investment grade value stock investing, and “base income” generation in an environment which recognizes and embraces the reality of cycles. It attempts to take advantage of both “fear and greed” decision-making by others, using a disciplined, patient, and common sense process.

This methodology thrives on the cyclical nature of markets, interest rates, and economies — and the political, social, and natural events that trigger changes in cyclical direction. Little weight is given to the short-term movement of market indices and averages, or to the idea that the calendar year is the playing field for the investment “game”.

Interestingly, the cycles themselves prove the irrelevance of calendar year analysis, and a little extra volatility throws Modern Portfolio Theory into a tailspin. No market index or average can reflect the content of YOUR unique portfolio of securities.

The MCIM methodology is not a market timing device, but its disciplines will force managers to add equities during corrections and to take profits enthusiastically during rallies. As a natural (and planned) affect, equity bucket “smart cash” levels will increase during upward cycles, and decrease as buying opportunities increase during downward cycles.

MCIM managers make no attempt to pick market bottoms or tops, and strict rules apply to both buying and selling disciplines.

NOTE: All of these rules are covered in detail in “The Brainwashing of the American Investor” .

Managing an MCIM portfolio requires disciplined attention to rules that minimize the risks of investing. Stocks are selected from a universe of Investment Grade Value Stocks… under 400 that are mostly large cap, multi-national, profitable, dividend paying, NYSE companies.

LIVE INTERVIEW – Investment Management expert Steve Selengut Discusses MCIM Strategies – LIVE INTERVIEW

Income securities (at least 30% of portfolios), include actively managed, closed-end funds (CEFs), investing in corporate, federal, and municipal fixed income securities, income paying real estate, energy royalties, tax exempt securities, etc. Multi level, and speculation heavy funds are avoided, and most have long term distribution histories.

No open end Mutual Funds, index derivatives, hedge funds, or futures betting mechanisms are allowed inside any MCIM portfolio.

All securities must generate regular income to qualify, and no security is ever permitted to become too large of a holding. Diversification is a major concern on an industry, or sector, level, but global diversification is a given with IGVSI companies.

Risk Minimization, The Essence of Market Cycle Investment Management

Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules— The QDI. (Read that again… often.)

Risk minimization requires the identification of what’s inside a portfolio. Risk control requires daily decision-making. Risk management requires security selection from a universe of securities that meet a known set of qualitative standards.

The Market Cycle Investment Management methodology helps to minimize financial risk:

  • It creates an intellectual “fire wall” that precludes you from investing in excessively speculative products and processes.
  • It focuses your decision making with clear rules for security selection, purchase price criteria, and profit-taking guidelines.
  • Cost based asset allocation keeps you goal focused while constantly increasing your base income.
  • It keeps poor diversification from creeping into your portfolio and eliminates unproductive assets in a rational manner.

A Twist on Dollar Cost Averaging

“Build a better mousetrap and the world will beat a path to your door.”
– Ralph Waldo Emerson


Written by Steve Nyvik, BBA, MBA, CIM, CFP, R.F.P.
Financial Planner and Portfolio Manager
Lycos Asset Management Inc.

What is Dollar Cost Averaging?
Dollar cost averaging (DCA) is an investment strategy for reducing the impact of investment volatility through making periodic purchases of the same dollar amount of an investment through time.  By making more than one purchase, the risk of overpaying lessens.  And where the investment drops in value, one buys more units of the investment resulting in the average cost of the investment dropping.  And where the market share price rises, fewer shares are bought.

To illustrate how this concept works, assume we are starting in January and we are going to save $1,000 each month and put the funds into a stock fund.  The stock fund’s current market price (also known as Net Asset Value Per Share or NAVPS) is $10.00.  We’ll assume that each month the stock fund market price drops by $1 each month and then it begins rising in August by $1 each month and gets back to $10 by December (See Chart 1 and Table 1).

A Twist on Dollar Cost Averaging - Chart1A Twist on Dollar Cost Averaging - Chart2

From February to November, the stock fund market price was less than $10.00 per unit. As such, we were able to buy more units for those months; this resulted in 1,691.270 units purchased by the end of the year worth $16,912.70. Had we bought $12,000 worth of units all in January, we would have only had 1,200.000 units worth $12,000. As a result, we ended up being ahead by $4,912.70 through the power of Dollar Cost Averaging. This happens because we got to buy units at prices less than $10.000 per unit.

Now let’s assume that the stock fund market price per share goes up by $1.00 each month to $15.00 in June and then starting in August it drops by $1.00 a month until December where it ends up at $10.00 a unit (See Chart 2 and Table 2).

As a result of the stock fund market price rising, we did worse as we were able to buy only 978.521 units worth $9,785.21 in December compared to buying 1,200.000 units at $10.00 per unit for $12,000 in January (which is also worth $12,000 in December). As a result, we are $2,214.79 worse off.

The Issues

  1. In order for Dollar Cost Averaging to be successful, you must buy more and more of the stock fund as it drops in value. The further it drops and the longer it stays down, the more shares you are able to accumulate. Unless you are really disciplined and have faith the investment will eventually rise in value, this may become a disaster. The typical investor is more likely to sell their shares that have been sitting for some time at a depressed price thereby making losses permanent.
  2. The actual investment and its valuation matters greatly. It should be a diversified investment – either a diversified stock fund or a market index fund. And that investment should be bought at a reasonable valuation. You need such an investment to have the confidence that, if it falls, it will eventually rise back to its fair value.
  3. Periodic purchases of an investment, like a stock fund, can eventually result in that investment becoming excessively large relative to the rest of your portfolio.
  4. You may be better off making regular deposits to your portfolio and allowing your percentage in equities relative to your equity target guide your investment allocation. If stocks go up in price, your percentage of equities rises which guides you to then buy fixed income investments. And if stocks fall, you’ll be guided to add money to stocks. This way you are more likely to buy low and sell high as opposed to buying units at a higher price.
  5. Should the market suffer a significant drop, it would then be best to borrow the equivalent of one year’s worth of savings from your line of credit to buy the investment and then direct savings towards paying down your line of credit. Not only do you by at a really depressed price, but you are also establishing a good credit history of responsible borrowing and repayment.

Dollar Cost Averaging is usually automated with regular deposits to an investment. It forces one to automatically save for their retirement.  Such regular monthly deposits could be for as low as $200 a month.  Where a market index is being bought and the market is not particularly volatile, this becomes a valid forced savings plan.  If you have an investment advisor, you are better off setting up an EFT (Electronic Fund Transfer) to automatically transfer funds from your bank account to your investment account each month and allow your advisor to allocate the cash where it makes the best sense.


The advantage of early renewals

A recent survey by the Canadian Mortgage and Housing Corporation (CMHC) found that 60% of Canadian mortgages were renewed before the scheduled date. Here are two good reasons why you should consider renewing your mortgage early: lower your mortgage rate and get ahead of any rate increases.

The bottom line is that early renewals may save you a lot of money. Homeowners know that over the life of a mortgage that rate increases are likely at renewal. The past six years have been an exception and may not continue indefinitely, which is why it’s a good idea to review your options now. Interest rates in the US are expected to rise this Fall and that could put upward pressure on Canada’s rates. It’s something we’ve heard often over the past few years and rates have remained the same. However, by renewing early, you are at least covered, if and when rates do to start to rise.

Buying your home was the biggest financial decision you made and you shopped around for the best mortgage product to suit your needs. Deciding to renew early is also a good time to shop around, for a number of reasons: Your current lender may not offer the best renewal rate; your financial situation may have changed and you may need to refinance; your goals may have changed and you may want to access equity for investment purposes. There are any number of scenarios that would necessitate an early renewal.

But where do you start? In CMHC’s survey, 55% of homeowners said they renewed early to avoid rate increases; however, less than half of them negotiated the terms with their current lender. Your lender will send your renewal documents approximately six months before renewal, which gives you time to do some research.

Working with me can help. A broker will review your situation with you and offer options to help you make informed decisions for short term and long term goals.

Here are a few more highlights from the CMHC survey:

  • 61% said they were “totally satisfied” with the decision to renew early
  • 49% of those renewing set their payment higher than the required minimum
  • 32% made a lump-sum payment, increased their regular payment or did both since their previous renewal

To find out your options at renewal time or earlier, call me today. Let’s review your situation and get you the best possible mortgage deal.
Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

A Preemptive, Timeless, Portfolio Protection Strategy

A participant in the morning Market Cycle Investment Management (MCIM) workshop observed: I’ve noticed that my account balances are near all time high levels. People are talking down the economy and the dollar. Is there any preemptive action I need to take?

An afternoon workshop attendee spoke of a similar predicament, but cautioned that a repeat of the June 2007 through early March 2009 correction must be avoided — a portfolio protection plan is essential!

What were they missing?

These investors were taking pretty much for granted the fact that their investment portfolios had more than merely survived the most severe correction in financial market history. They had recouped all of their market value, and maintained their cash flow to boot. The market averages seemed afraid to move higher.

Their preemptive portfolio protection plan was already in place — and it worked amazingly well, as it certainly should for anyone who follows the general principles and disciplined strategies of the MCIM.

But instead of patting themselves on the back for their proper preparation and positioning, here they were, lamenting the possibility of the next dip in securities’ prices. Corrections, big and small, are a simple fact of investment life whose origination point can only be identified using rear view mirrors.

Investors constantly focus on the event instead of the opportunity that the event represents. Being retrospective instead of hindsightful helps us learn from our experiences. The length, depth, and scope of the financial crisis correction were unknowns in mid-2007. The parameters of the recent advance are just as much of a mystery now.

MCIM forces us to prepare for cyclical oscillations by requiring that: a) we take reasonable profits quickly whenever they are available, b) we maintain our “cost-based” asset allocation formula using long-term (retirement, etc.) goals, and c) we slowly move into new opportunities only after downturns that the “conventional wisdom” identifies as correction level— i. e., twenty percent.

  • So, a better question, concern, or observation during an unusually long rally, given the extraordinary performance scenario that these investors acknowledge, would be: What can I do to take advantage of the market cycle even more effectively — the next time?

The answer is as practically simple as it is emotionally difficult. You need to add to portfolios during precipitous or long term market downturns to take advantage of lower prices — just as you would do in every other aspect of your life. You need first to establish new positions, and then to add to old ones that continue to live up to WCM (Working Capital Model) quality standards.

You need to maintain your asset allocation by adding to income positions properly, and monitor cost based diversification levels closely. You need to apply cyclical patience and understanding to your thinking and hang on to the safety bar until the climb back up the hill makes you smile. Repeat the process. Repeat the process. Repeat the process.

The retrospective?

The MCIM methodology was nearly fifteen years old when the robust 1987 rally became the dreaded “Black Monday”, (computer loop?) correction of October 19th. Sudden and sharp, that 50% or so correction proved the applicability of a methodology that had fared well in earlier minor downturns.

According to the guidelines, portfolio “smart cash” was building through August; new buying overtook profit taking early in September, and continued well into 1988.

Ten years later, there was a slightly less disastrous correction, followed by clear sailing until 9/11. There was one major difference: the government didn’t kill any companies or undo market safeguards that had been in place since the Great Depression.

Dot-Com Bubble! What Dot-Com Bubble?

Working Capital Model buying rules prohibit the type of rampant speculation that became Wall Street vogue during that era. The WCM credo after the bursting was: “no NASDAQ, no Mutual Funds, no IPOs, no Problem.” Investment Grade Value Stocks (IGVSI stocks) regained their luster as the no-value-no-profits securities slip-slided away into the Hudson.

Embarrassed Wall Street investment firms used their influence to ban the “Brainwashing of the American Investor” book and sent the authorities in to stifle the free speech of WCM users — just a rumor, really.

Once again, through the “Financial Crisis”, for the umpteenth time in the forty years since its development, Working Capital Model operating systems have proven that they are an outstanding Market Cycle Investment Management Methodology.

And what was it that the workshop participants didn’t realize they had — a preemptive portfolio protection strategy for the entire market cycle. One that even a caveman can learn to use effectively.

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