Good morning everybody.  We had a great response to our Building Futures Blog and our Net Worth Blog.

Our phones haven’t stopped ringing because you all wanted to learn how you can paint a better financial picture for yourselves.  For those of you who requested more information regarding the Building Futures Plan please note that we are preparing a presentation for you which you can all view hopefully in the next couple of weeks.  We will also be sending out letters to clients who we believe can take advantage of this strategy, so please stay tuned for that.

On a side note, we received applications for our Client Relationship Manager position.  We are scheduling interviews this week so if you know any friends and family who are interested please make sure you contact us.

Right now there’s a lot of question hovering around the variable and fixed term mortgages.  Variable mortgages can be considered more as short term options.

One must consider the total costs over the full life of your loan and you also need to consider how comfortable you are with the extra uncertainty that choosing short-term mortgages brings.

How much of a gamble can you take with the size of your monthly mortgage payment? For example, if your job and income are unstable and you need to borrow an amount that stretches your monthly budget, you can’t afford much risk. If you’re in this situation, you may want to stick with a long-term mortgage.

If you’re in a position to take the financial risks associated with mortgage payments that may change every six months or year, you have a better chance of saving money with a shorter-term mortgage. Your interest rate starts lower and stays lower when the overall level of interest rates stays unchanged. Even if rates go up, there’s a good possibility they will come back down over the life of your loan. Sticking with your short-term mortgage for better and for worse will likely help you come out ahead in the long run.

A short-term mortgage makes more sense if you borrow less than you’re qualified for. Or perhaps you can save a sizable chunk – more than 10 per cent – of your monthly income. If your income significantly exceeds your spending patterns, you may feel less anxiety about fluctuating interest rates. If you do choose a short term, you may feel more financially secure if you have a hefty financial cushion (at least six months’ to as much as a year’s worth of expenses reserved) that you can access if rates go up.

Don’t take a short-term mortgage just because the lower interest rate allows you to afford the property you want to buy (unless you’re absolutely certain your income will rise to meet possible future payment increases). Try setting your sights on a property you can afford to buy with a longer-term mortgage. Ideally keep your monthly payment the same as what a long term rate is but take the shorter term mortgage.

Bernadette Laxamana’s Mortgage Update – English Version

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