PRODUCED FOR MEMBERS AND FRIENDS OF THE NORTH SHORE CREvir UNION

How to beat the high cost of a mortgage

Better mortgage
strate

y/ if Hello, ’'m William Clark.
I head up the Credit and Trust
Services department. This year
about 500 of you will do
something you’ve likely never
done before — take out a
building permit and start
renovating. What I want to talk

about today 1s financing that
renovation. If you turn to the
back of this Communicator,
you'll find more details.

Y —
‘ here’s a trick to beating the
high cost of a mortgage. Wait
for lower interest rates, you say?

Maybe. If we’re lucky. But whether
rates go up or down, you have a

nasty old mortgage more affordable.

Option !: shorten up the
amortization period.

For most of us, mortgages are a
short term, month-at-a-time
struggle. In reality, however, a
mortgage is a long term struggle,
and the shorter the length of that
struggle, the cheaper the mortgage.
For instance, if you take a $100,000
mortgage at 11%, amortized over 25
years, you'll pay $963 per month.
Over 20 years the same mortgage
costs $1,016. The difference? A mere
$53. But your savings are
remarkable — by eliminating five

years of mortgage payments, vou
save $45,241,

Option 2: the ‘Pay Down’.

In truth, the expensive part of a
mortgage isn't the principal amount
you need to borrow but the interest
charged for borrowing it. How does
that work? A $100,000 mortgage.
over 25 years, at 11% interest costs
vou $189,511 in interest — almost

les

variety of other options to make that

‘J mortgage.

| The simple solution to this

} dilemma? Pay down the principal as
a\ fast as you can. Look for a
mortgage lender that lets you make
}/lump sum payments, usually once a
year on the anniversary of the
mortgage. By doing so, you're
robbing the bread from the mouths
of financial institutions and so they
tend to put an upper limit on the
pay down. 10 - 15% is common.

Option 3: bi-weekly payments.
We saved the best for last — pay
your mortgage off every two weeks
instead of once a month. Let's use
the example of the $100,000
mortgage at 11% for 25 years. That
works out to a inonthiy payment of
$963. But does it really bother you
to make two payments for $481.50
instead of one big payment for $963?
Probably not, and the pay-off is
dramatic: if you send in $481.50
every 14 days, the $189,511 you
would have paid in interest is
reduced almost 40%. You save tens
of thousands of dollars — it’s no
accident that here, we call our bi-
weekly mortgage the ‘Economizer’.

ADMINISTRATION OFFICE
301 - 1112 Lonsdale Ave.
North Vancouver, 8.C. V7M 2H2
Phone: 980-6728

Mon. - Fri. 8:30 - 5:00

. NORTH SHORE
NER ss

Folens inyour C ommunily

SPRING/91

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