Top 3 Mortgage Mistakes

Your mortgage needs to be much more than just about the rate.    It’s the cornerstone to a strong overall wealth plan.   Yet focusing on rate is the most common mistake I see clients make when looking for a mortgage solution.     Rate is actually the least important factor.

#1 Mistake:    Focusing on Rate

Factors way more important than rate:

  1. Lower penalties -  if you refinance or sell your property before the term is up
  2. Readvanceable Mortgage – giving you access to additional funds if wanted
  3. Sub-account system – to be able to write off debt against investments (eg investment portfolio or income property)
  4. Longer amortizations – to maximize cash flow and give you more flexibility

I also commonly see a focus on paying down the mortgage once it’s in place only to run into credit card debt or missed opportunities as a result of the higher payments

#2 Mistake:    Quick paying their mortgage

How a lower mortgage payment and greater cash flow can access to other opportunities:

  1. Participate in your companies matching pension plan or stock purchase plan
  2. Contribution to RESPs and get government grants
  3. Purchase permanent insurance products that can give you a tax-free income in retirement
  4. Create a tax deduction from the interest on your mortgage

#3 Mistake:     Choosing to have a lower mortgage balance than required

Benefits of a higher mortgage

  1. Money to purchase an investment giving you cash flow
  2. Fund for a rental property
  3. Reduce the overall interest rate you pay on debts

Your mortgage is probably the biggest debt you have.   And your home is probably your biggest asset.   Shouldn't it play a key role in your financial plan?