I must admit … we just got a reality check.
As a wealth strategist, my job is to advise people. And one of the pieces of advice I am often giving is to “Be Your Own Banker” and control the banking function in your life.
But I must admit, while making great strides and following this advice myself, I am not there yet. And recently I have really felt the rath of the bankers controlling my life. And this is a very personal story and one in which I wanted to share with you.
My husband Bill and I have had some major life changes recently. In the last year and a half we have both lost our remaining parents, and then our dog Buck had to be put down as well. Death is an inevitable part of life … so, while terribly sad … it was something that we new would happen one day.
We had talked about this eventuality and what life would look like. What would happen when our parents no longer needed our help. It was/is our dream to move up to Collingwood while we are still active and play! We are both in our mid 50s. We are drawn to all that Collingwood has to offer … friends, downhill skiing, x-country skiing, boating, hiking, golf, fine dining, brew pubs, and a great vintages section in the LCBO!
However, because we do not control the banking function in our lives, it might not happen.
I went to the bank that holds the mortgage to our principal residence to see if we could increase our borrowing capacity. Wanting to see what we would qualify for in Collingwood. So to my dismay, not only do we not qualify for an increase, we don’t even qualify for the mortgage we have. And what this means is crucial … they won’t let us port our existing mortgage.
We have had this mortgage for 12 years. The loan is less than 35% of the value of the property. I’m pissed.
What are our options? Well its not pretty. We can break our current mortgage … a $5K penalty. We lose our 3% rate. We can only qualify for a B lender on a new place. So that means a 7% interest rate, plus a 1% lender fee. And its only for a one-year term. That means we will be in the same boat a year later. Another option is to sell some of our income properties, but then we lose the income from the property and forfeit the long-term appreciation as well. Not to mention the capital gains tax.
Why are we in this boat? Some of it was a personal choice … Bill retired from a “job” and is managing the income properties … but not showing as much income. When we sold properties in 2020 and 2021, I took little income from our corporation in order to pay less tax. We both were in the enviable position to work less to both enjoy travel and activities as well as to take care of our parents in their final days. And of course with the rise in interest rates our income properties cash flow less, and this affects debt servicing numbers and mortgage qualifications.
My mortgage company will not look at the income earned in the corporation, only the income I report personally … and they say capital gains don’t count. They control the banking function. They want us to pay a penalty. They want us to break a 3% mortgage. They can relend it at 6%. They have all the control.
What does it really mean to control the banking function in your life? To have capitalized your Infinite Banking Wealth Insurance Policy sufficiently that you do not depend on traditional banks for financing. I admit we have been doing really well growing tax-sheltered wealth within our policies … but we are not quite there yet. Not at the point where we are completely free of traditional mortgage financing.
Academically/ theoretically …. I have known for a long time what it means when you don’t control the banking function in your life. But now we are truly experiencing it in reality. And I don’t like it one bit.
I think everyone is feeling their own newfound reality right now. We are not alone. Nobody has gone unscathed. We are all feeling the affects of high inflation. We have rising mortgage costs either through variable interest rate mortgage increases or the shock of renewing a fixed term mortgage. There have been major losses in the stock market as well as a pull back in real estate values.
We’ve survived the 2008 financial crash. We’ve survived the covid crisis. And we are surviving this world of high inflation and rates.
We are seriously grateful for our lives. We have been blessed to have had the time to spend with our parents, and to have options because of the insurance policies and income properties we have. We have a great home in Brooklin we love, and we still plan on spending the winter skiing and snowmobiling.
But there is no doubt that in the next 30 years, should we be fortunate enough to live that long, there will be new and unforeseen situations that hit our financial world. Capitalizing an infinite banking wealth insurance policy is one of the best ways we can grow our wealth on a taxed advantaged basis and protect ourselves for the next bump in the road.
Our policy helps us to
- provide a source of funds in emergencies
- purchase income properties with zero down
- pay off bank mortgage debt so our income properties cash flow
- pay off high interest rate debt to manage cash flow
- have a safe warehouse of wealth in an asset that can never lose value
- provide a tax-free income in retirement
… and so much more
The older we get, the more of our wealth is at stake. I seriously urge you to speak to me today to see how an infinite banking policy can greatly improve your financial plan. Whatever path you are on … its better with infinite banking.