Hi,
I have two questions for the forum here.
1. My mortgage is one year old (5.1%). Does it make sense to refinance it now (considering the fee and penalty I will have to pay) or should I wait.
2. I have about 40% equity in my home.
A) Is it prudent to take out that equity and invest in the market?
B) If yes, What %age of that should be appropriate to invest?
C) Should I go to the bank I have the mortgage or should I shop foe better deal
on interest for the loan?
D) Any good financial advisers around Guelph area?
Thanks in advance
Quote:
Originally posted by Ranin
Hi,
I have two questions for the forum here.
1. My mortgage is one year old (5.1%). Does it make sense to refinance it now (considering the fee and penalty I will have to pay) or should I wait.
2. I have about 40% equity in my home.
A) Is it prudent to take out that equity and invest in the market?
B) If yes, What %age of that should be appropriate to invest?
C) Should I go to the bank I have the mortgage or should I shop foe better deal
on interest for the loan?
D) Any good financial advisers around Guelph area?
Thanks in advance
1. Your mortgage rate is not that bad and hence you should not refinance it only for the purpose of reducing the mortgage rate. However, if you want to refinance it and pay down high interest debts then you should discuss with a mortgage professional and weigh all pros and cons and then decide the best course of action after working out all the numbers.
2. It is good that you have around 40% equity in your house and;
A. This might prove to be useful for you either for reducing debts or for the purpose of investing by employing 'Smith Manoeuvre'. However, you need to discuss this with a financial advisor, understand the intricacies and then take a decision.
B. For the purpose of investing, you can take out 15% of the equity leaving 25% equity so that you do not have to pay CMHC/GE insurance fee. The financial advisor will discuss this with you in details.
C. For the purpose of starting 'Smith Manoeuvre' you need to have a special type of mortgage which is called 'Readvanceable mortgage' and you need to find out if your bank offers that product and flexibility or not. If not, then you may have to again sit with a mortgage professional to see the pros and cons of changing your present mortgage to a 'readvanceable mortgage'.
D. I do not know any financial planner in Guelph Area, however, If you feel like, you can contact me as I offer mortgage and investment services from GTA to Kitchener Waterloo and Cambridge and have helped my clients set up the 'readvanceable mortgage' to start investing by employing 'Smith Manoeuvre'
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks Mr. Chopra, I will contact you.
Posts: 1628
Location: carl sagan's universe
Posted on: 10-04-07 22:29:39
Location: carl sagan's universe
Posted on: 10-04-07 22:29:39
Quote:
Originally posted by Pramod Chopra
[
C. For the purpose of starting 'Smith Manoeuvre' you need to have a special type of mortgage which is called 'Readvanceable mortgage' and you need to find out if your bank offers that product and flexibility or not. If not, then you may have to again sit with a mortgage professional to see the pros and cons of changing your present mortgage to a 'readvanceable mortgage'.
D.
With all deference to you Pramod, it is not necessary to go the readvanceable mortgage route for the Smith Man- unless you mean it in the strict sense. There are slight variations on it, actually better and faster w/o any need to touch one's present mortgage and no need to shell out money from one's pocket to pay the necessary deductible interest.
THE SMITH MANOEUVRE in a nutshell is:
A financial strategy designed to convert the non-deductible interest debt of a house mortgage to the deductible interest debt of an investment loan, which similtaneously ensures the building of a free and clear investment portfolio.
Benefits of The Smith Manoeuvre
You receive free tax refunds each and every year;
You can save potentially tens of thousands of dollars in taxes;
You can pay your mortgage off early;
You can create a sizable investment portfolio;
You can receive all of the above financial benefits without spending one dollar more on your monthly mortgage payments than you are spending now
The analysis, implementation and monitoring of The Smith Manoeuvre is a significant task requiring many skills. We recommend you engage the services of a professional financial advisor to ensure you miss no opportunities to improve your financial future.
Contrary to popular opinion, not all financial advisors are the same. Not all financial advisors have the same level of knowledge, skills or expertise. The fact is that there are very few financial advisors in Canada who have the specific knowledge and expertise relating to The Smith Manouevre financial strategy
