-GTA\’s Leading Mortgage Expert

This is a very good question and one which many people do not bother to ask. This time period is absolutely crucial to the success of purchasing your home and paying as little interest as possible! You see, there are only two things that determine what kind of a rate you will receive when you renew next term: the economy and your personal situation. Obviously you can do little alone to control the economy but you have absolute control over your personal situation. Do everything you possibly can to make yourself the best candidate for a primo mortgage and you’ll be thrilled when it’s time to renew! So, what are some things you can do? Well there are two major ways including increasing your credit and decreasing your debt. Let’s start with your credit.

I like to think of my finances as a game and my credit being my score. If you have a low credit score, you’re losing and need to increase it. It’s very simple; first reduce the damage on your credit as much as possible and then increase your score as high as possible before it becomes time to renew. If any one of your accounts moves to collections, do not pay. Instead, call the collection agency immediately and begin bargaining. Here is a tip, if you initiate the calls and take control by negotiating terms of payment, they will be MUCH friendlier and more flexible than if you dodge their calls and try to avoid them. In some cases, you can negotiate to remove them off your credit record entirely in exchange for a full payment. Make sure you come up with the agreement and get it in writing before making a payment.

If you have many lines of credit and you have not consolidated them into your mortgage already, consolidate them into the line of credit with the lowest interest rate. In doing so, you will be paying less in interest and making it easier for your to make the minimum payment stopping any damage to your credit. The last tip for increasing your credit score is counter-intuitive but, DO NOT GET RID OF YOUR CREDIT CARDS! In doing so, you are essentially telling the world that you give up and finally admit that you’re not responsible enough to be trusted with credit. I have news for you; a mortgage is CREDIT and a whole lot of it. Instead, after consolidating your debt, use your credit cards regularly for everyday purchases such as gas, groceries or paying off your bills. What I personally do is very simple: I make one of my credit cards pay off all my bills in full automatically every month. Then, my chequing account automatically pays the balance off twice a month ensuring I pay no interest on my card. I personally endorse keeping approximately 4 – 6 credit cards, assuming that you use and pay them off in full regularly. I’ll write another article later on going into more depth on how exactly your credit score is calculated and what you can do to increase the score but for now, you just know that you must fix the damage that’s been done and increase the score as much as much as possible.

Reduce the debt that you owe. Your personal level of debt is crucial in determining the rate you will receive on your mortgage so naturally; it makes sense to reduce it. My favorite way is called the snowball method and it’s very simple. Essentially, after consolidating your high interest debt as much as possible, you make minimum payments to all your lines of credit. Any money left over should be put to the line with the highest interest rate. The higher the interest rate, the more toxic the line of credit. Every month, more of that payment is going towards the principle and less is going towards interest. Once you pay that line of credit off, you move to the line with the next highest interest rate and repeat. Every month, you are putting a higher amount towards the principle of all your debts, increasing the speed of paying your debts off exponentially, just like a snowball rolling down a hill! This will ensure you are at a better position for renewing your mortgage.

These are two major ways in which you can make yourself the best candidate for a good rate when your renewal date comes up. Other ways include, but are not restricted to: increasing your income, increasing the equity you have in your home (by making lump sum payments into your mortgage) and increasing your collateral (stocks, bonds, mutual funds, life insurance, etc…). Just remember that not only will increasing your credit score and decreasing your debt help you achieve a better mortgage, it will also make you more financially healthy overall. Let’s face it; in a world where people say “Money isn’t everything” it certainly can be for those who struggle with making and keeping it. By taking control of your finances, you can make handling money a game instead of a burden. For more information, please feel free to contact me at Narinder_Sidhu@centum.ca.

Narinder is a leading expert in the mortgage industry, focusing in the GTA. He works as a full time agent at Centum One Financial Group and in his spare time, both contributes articles and holds free seminars within the community. To learn more, please visit my Brampton Mortgage website.

Narinder is a leading expert in the mortgage industry, focusing in the GTA. He works as a full time agent at Centum One Financial Group and in his spare time, both contributes articles and holds free seminars within the community. To learn more, please visit http://NarinderSidhu.com.

Author Bio: Narinder is a leading expert in the mortgage industry, focusing in the GTA. He works as a full time agent at Centum One Financial Group and in his spare time, both contributes articles and holds free seminars within the community. To learn more, please visit my Brampton Mortgage website.

Category: Finances
Keywords: Mortgage Agent, Credit, Refinance, Renew, Term, Brampton, Mississauga, Amortization, Mortgage