Clients came in today as their 5 year fixed mortgage was up for renewal, as many others they asked...
"it seems as though I am paying all this money out each month, but I don't see my debt decreasing fast at all, if any,... I would like to free up $300 in monthly cashflow... any ideas?"
After looking deep into the numbers I can see why.......
Current set up: Value of home is $190,000
Mortgage Balance of $120,000, Line of credit of $20,000, store card of $4000, creditcard1 of $2000, Credit card2 of $1500... So $147,500 in debt and pays $1547 per month towards that debt.... Not too bad right?...BUT GET THIS... Principle paid off is.... under $2000 PER YEAR!!... THEY WERE RIGHT!... that set up could take upto 73 years!
New Plan: Combine all the debt into a 5 year fixed mortgage of $147,500 with a rate of 3.00%, set the payments at $1247 ($300 less like clients asked for).... and the amount of principle paid ?!?!?!... Ready for this ??..... $9126... PER YEAR!!!
So although the clients are paying $300 less per month out of their pocket, they are now going to be DEBT FREE in 16 years oppose 73 years !!!!....WOW
Now this in only the case in this and every scenario is different, but it does make you wonder who out there is trying to help us Canadians get out of debt.... and who is trying to earn more off of our debt.
Michael Mullis, President of Mortgage Teacher.