Mortgages in a Brave New World

Jeff Evans
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WHY AM I A MORTGAGE BROKER?

I became a mortgage broker to help families take control of their finances, away from the banks and government. Mortgages are the loans with the lowest interest rates available. I help families to finance their beautiful new homes, decrease taxes, increase net worth, improve cash flow, and decrease debt costs.

I have discovered things that are essential for families to understand when living in a country like Canada. And since I would like to help your family, I will share them with you.

GOVERNMENTS REWARD DEBTORS

Structured correctly, governments will reward debtors for borrowing money by making debt tax-deductible. Governments do not provide a tax credit to people who put money beneath their mattresses. Additionally, they charge the same amount of tax on interest-bearing investments as they do on employment income. As a result, GIC’s and term deposits offered by banks are unprofitable after taxes and inflation. Here is an example:

$20000 term deposit earning 4.5% interest = $900
tax @ 40% = $360
inflation cost @ 2% inflation = $400
True return after taxes = $140
Rate of return after taxes and inflation = 0.7%

In the above example, 4.5% interest results in only a 0.7% return on investment!

Please note: If you are happy with this rate of return, I will be more than pleased to borrow your money and will even offer you a 5% rate of return!

INCREASE YOUR NET WORTH

There is no guarantee that real estate will appreciate in value. However, real estate values have performed well in the long term. The B.C. Assessment Authority assessed that B.C.’s real estate values have increased by 16% in 2007! Let’s look at an example of how this could benefit you:

Average rate of appreciation = 5%
Property Value = $300,000
Value of home after 1 year = $315,000
Value of home after 5 years = $382,884.47

In this example, you would have made $82,000 tax-free over 5 years. How would you feel to have this equity available to you?

USE YOUR MORTGAGE TO PAY OFF OTHER COSTLY DEBTS

Do you have much debt on credit cards, and are you finding it a burden financially? With a home, you can use the appreciation in value to consolidate debt into a much more affordable payment. Consider the following example:

Payment TypeAmountMonthly Payments
Existing Mortgage @5.5%$ 230,362.61$ 1,227.74
Credit Card Debt$ 35,000$ 1050.00
Car Loan @ 6.5%$ 15,000$ 450.00
Total$ 280,362.61$ 2727.74
New Mortgage @5.5%$ 348,511.27$ 1434.22
Monthly Savings$ 1293.52

Paying off expensive after-tax debt such as credit card debt can be a wise investment. This would only be possible with a home and mortgage.

REAL ESTATE IS HIGHLY LEVERAGED

Were you previously happy with the 4.5% return on a GIC from the bank? If you were, you are about to be shocked. If not, it still might surprise you.

Down payment (Investment) = $60000
Increase in value during year 1 = $15000
Return on investment = $15000/$60000 x 100 = 25%
Equivalent pre-tax rate of return = 41.6% (assuming 40% tax bracket)
Return on investment with no mortgage = 5%

In this example your after-tax rate of return was 25%! This is where a mortgage is its most powerful. If you owned the home without a mortgage, your rate of return would only be 5%. Leverage is a powerful tool to put to use for your family. To learn more about leverage, please read my material on (the power of leverage.)

CAN YOU AFFORD TO NOT HAVE A MORTGAGE?

Are you concerned that you don’t have time to worry about mortgages? Don’t, it’s easy! I am available to chat any time (if it is 3 am, I might be sleeping, but you are welcome to try!) I can meet you at your home at a time that is convenient to you. I will do all the work for you. Think of me as your personal mortgage servant.

My team of professionals and I will help you every step of the way, from choosing a home to signing the paperwork, and we will make the process easy for you and your family.

Are you concerned that you have no savings for a down payment? No problem. I have lenders who can provide you with 100% financing.

Do you have new or challenged credit? No problem. I have lenders who will finance your beautiful new home at competitive rates.

Are you new at your job, or new in the country? Are you self employed, a business owner, or in the service industry? No problem. I will make sure I do my best to get you into a beautiful home.

I am good at my job, and I believe that if you have been patient in reading to this point, you or someone you know could use my assistance. If you would like to have a place to call home, and you appreciate this information, please give me a call. My contact number is 604-318-1292. It would be my pleasure to assist you.

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