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:
- Lower penalties – if you refinance or sell your property before the term is up
- Readvanceable Mortgage – giving you access to additional funds if wanted
- Sub-account system – to be able to write off debt against investments (eg investment portfolio or income property)
- 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:
- Participate in your companies matching pension plan or stock purchase plan
- Contribution to RESPs and get government grants
- Purchase permanent insurance products that can give you a tax-free income in retirement
- 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
- Money to purchase an investment giving you cash flow
- Fund for a rental property
- 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?
