Which should you invest in – stocks or mortgages?
I’ll tell you a short story:
John had some extra cash he wanted to invest.
SCENARIO 1: John went and invested his money in stocks, which promptly dropped in value. Frustrated, John went to his stock broker and asked for his money back. His broker informed him that he was unable to get his money back.
SCENARIO 2: John went and invested his money in a mortgage, which the borrower promptly did not pay. Frustrated John went to court, sold the house that the mortgage was secured against and got his money back.
Ideally none of us would lose money but if we do – which scenario would you rather be in?
If you would like to lend money in the form of a mortgage, give me a call.
Thanks!
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 3% [?]
This article is geared towards those with a little extra cash in their pockets. If you have $25k, $50k, $100k or more – you could do yourself a favour and make some money with your money. It is quite common to lend money out in the form of mortgages for about 10%. I have arranged many mortgages for individuals who lend to other individuals for 10% (or more). Why would anyone pay 10%+? There are many reasons:
1) Less hassle (dealing with a person who is lending the money directly instead of a bank eliminates a lot of bureaucracy, and policy and rules that normally make it more difficult to borrow money.
2) Faster – quite often, with less hassle and less bureaucracy the clients can get money faster (and the lenders can make money faster).
So, lets say you have some money that you would like to lend out:
Below is a chart of how much money you can make each year (at an interest rate of 10%) if you have $25k, $50k, $75k, or $100k (at interest only payments).
| Principal Needed |
Money made in 1 year at 10% (interest only) |
Money made in 1 month at 10% (interest only) |
| $25,000 |
$2,500 |
$208.33 |
| $50,000 |
$5,000 |
$416.67 |
| $75,000 |
$7,500 |
$625.00 |
| $100,000 |
$10,000 |
$833.33 |
Could you use an extra $208.33, $416.67, $625.00, or $833.33 every month – I bet it would get you a little closer to stop punching the clock. If you want to lend out some money – let me know.
Thanks!
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 2% [?]
A recent study by Morneau Sobeco (Montreal pension consultants) stated that baby boomers are saving too much money. What awesome news! So, should baby boomers start spending and stop saving as much? I wouldn’t say that you should make an abrupt change and start spending like crazy – but – you could start to enjoy the fruits of your labour a little more.
Now, those who don’t need to necessarily save as much is “generation x” (the children of the baby boomers). Why? Well, baby boomers and generation x won’t be exactly contending for the same items ie. a 65 year old man (or woman) likely isn’t as worried about investing in real estate as a 35 year old would be. So, with there being such a lack of competition among generation x (considering we (generation x) are so rare in overall numbers), prices are likely to drop for us. I predict that prices will drop for us (no only because we are so few) but also because the baby boomers were before us and expanded all businesses with so little of us to rely on keeping these age-sensitive industries expanding. This means that we will have a lot of dirt bike companies that were making a lot of money with the baby-boomers, however, are not anymore, with an oversupply of dirt bikes and manufacturing equipment left over from their hay day. All this equals low prices for generation x.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 19% [?]
THIS IS NOT A REAL STORY: I once looked at arranging a mortgage (as Calgary mortgage brokers) for a man who had pretty rough credit. This is not uncommon, nor is it anything to be embarrassed about. But I want to tell you why lenders (and you, yourselves) should be afraid of bad credit. Bad credit simply means that you don’t pay your debts on time (or, sometimes, at all). Getting back to this man who I considered financing – one day he called me up and said that he didn’t have enough money for the bus and therefore, couldn’t get to work (and therefore he couldn’t make any money). This man, by virtue of his habits, ended up being broke, unable to make money, unable to provide for his family and certainly unable to pay his debts.
The moral of the story:
Save your money, pay your debts and put your needs before your wants.
A scary statistic that I heard once was that “the average person is only two paycheques away from being homeless.” Take my advice, work on having money in the bank and good credit. It will help you in ways that you can only imagine. It will even give you better relationships (considering that the majority of people argue about money).
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 3% [?]
I had a friend who I grew up with. Then, one day, he moved away. I ran into him years later (after I started working with Calgary mortgage brokers) and I asked him why they decided to move. He told me that his parents couldn’t afford their home (and couldn’t for some time). I asked him what he meant by that – he said his parents were unable to make payments on the house for the last 4-6 months that they had lived there. “But”, I said, “I remember that the house wasn’t sold in foreclosure when it was sold”. He agreed and said that his aunts and uncles were actually the ones making the payments during this time.
The moral of the story:
Family is crucial. When qualifying for a mortgage – don’t get your shoes nailed completely to the floor, save your money – be there for your family when they need you and they’ll be there for you too.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 2% [?]
Lending money is not rocket science. The safeguards that are put in place would be pretty easy to get around if you really wanted to. Buy why would you? In many cases, when the lenders decline an application, they are giving free, sage advice.
An interesting, relevant, and true story:
I have a friend who lives in a small resort village of about 85 residents (year round). The resort is not near any large city centers and for all intents and purposes it is pretty isolated. One year the mayor of this small village decided to found a small diner/restaurant. He began by buying the land, buying a mobile home, buying the equipment and then by opening his diner and try and make money – but he didn’t have a mortgage, he did this all with his savings. Now, in a town of 85 year-round residents you can imagine that he was far from becoming rich. It wasn’t too long before he realized that he was nowhere near getting his investment back. So, he put the place up for sale (and it stayed up for sale for a few years).
THEN – along came a nice man who had just entered the world of retirement. He had sold his house and had a few hundred thousand dollars. So he bought an old motor-home and during his travels he came across this little village that my friend lives in. Here, the man saw the diamond in the rough – a small resteraunt with BIG potential. So the nice man bought it for the asking price (with his savings) and “gave it a go”. It wasn’t long before he too realized that making money in this small resort was close to impossible. He then tried to sell it – but no one was willing to buy it. To this day the diner sits empty and depreciating while the once-pristine equipment slowly succumbs to the trials of time.
The moral of the story:
Neither owner of this restaurant did any market research. They didn’t go around and ask the residents if they would frequent such a diner, which they could have easily done by going from door to door, or handing out flyers asking for people’s opinions. Even if they used conservative estimates they could have easily seen that there was no money to be made in this town. AND there is another way to get a good indication as to if the diner was a good gamble – talk to a lender. Lenders are a great way to check if what you are trying to do is a good bet. Since you are asking them to lend money in the same enterprise as you – THEY DO ALL THE RESEARCH. So, if a lender declines you – take it as free advice that they don’t think you can handle what you are trying to get into.
So, don’t try and fool the lenders with fake documents or fake data – their advice, when based on your real information, is priceless!
Calgary mortgage brokers
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 3% [?]
The Bank of Canada recently declared that they will keep rates stable in the near future. This is good news right? Well…maybe. There are always two sides to a coin – the good news is that rates are going to be remaining low for right now. The bad news is that there is a reason they are staying low. The below is advice from Calgary Mortgage Brokers.
The theory behind interest rates:
The more it costs to borrow money, the less people will borrow. This then curves inflation because there are fewer people purchasing items and therefore prices drop to try and encourage others to buy too (and vice-versa).
So, if the economy is picking up (and consequently, so will inflation) then the government will increase interest rates to ensure that people who have low or fixed incomes can still afford to buy things.
And, if the economy is slowing down or is predicted to be slow or remain slow then the government will leave rates low.
So, what does it mean when the government is keeping rates low? It means that they are predicting slow times ahead – So, if you can afford it. Now is the time to buy because rates are low and so are prices. But don’t go out and spend money on luxuries that you don’t need (if you have to borrow money to get them), because chances are high that you won’t be making money “hand over fist” in 2011.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Website: www.mortgagebrokercalgary.info
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Website: www.mortgagebrokercalgary.info
Popularity: 5% [?]
There are a number of indicators as to if rates are going to go up or down. I am just going to point out a few simple ones.
1) If a USA federal election is comming – typically rates drop just before a USA federal election (some speculate this is so that
voters are happy with their current government. And if it happens in the USA, Canada is quick to follow. In fact – the mortgage
broker arm of the CIBC Bank offers a mortgage term that comes up for maturity every time there is a federal election.
2) If the banks have all suffered a loss of some kind – rates are going up. The bank never loses – if their profits are down, they’ll
make you pay.
3) If Inflation is high – in an effort to curb inflation the federal governments typically increase the interest rates to discourage
spending and cool off inflation.
4) If inflation is low – in an effort to promote market activity the federal governments will typically reduce rates to induce spending.
5) If the difference between the federal banks’ overnight lending rates and the banks’ prime rates have increased. Ie. if the banks can
borrow the money from the federal banks at 2% and they typically charge 1% more, therefore making their prime rate 3%. If the banks all
of a sudden start to charge 2% as their premium, therefore making their prime rate 4% – keep an eye on this. They could just be trying to
make up some losses. Chances are high that they’ll drop the rate back down to a 1% premium – but be weary if all banks/lenders do this -
it could be a new trend.
Please contact Calgary mortgage brokers for some tips.
This article was written by Trevor Hickey, B.A. who is a Mortgage Associate in Calgary, Alberta, Canada.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 5% [?]
It doesn’t always make sense to payout a mortgage for lower rates when you have to pay a penalty. Lets look at the following scenarios:
1) When you are sure rates will drop like a rock any day now – in this event, even if you have to pay an IRD penalty this is one of those
times that it makes sense to pay an IRD – then get an open mortgage or line of credit. You do this because you want to get
a fixed mortgage when the rates are the lowest so that you are safe when the mortgage rates start to rise.
2) When mortgage rates are low and are not likely to go much lower – if you have to pay a 3 month payout penalty go for it. If you have to
pay an IRD – your penalty will be for the exact same amount as your savings so there is no point in paying an IRD.
Feel free to contact Calgary mortgage brokers for some free advice.
This article was written by Trevor Hickey, B.A. who is a Mortgage Associate in Calgary, Alberta, Canada.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 2% [?]
You may have heard in the news recently about mortgage companies and banks that are charging outrageously high payout penalties.
You may have also heard the term “IRD” or “Interest Rate Differential” used to explain this phenomenon of high payout penalties.
What Interest Rate Differential (IRD) means is if mortgage rates have dropped since you borrowed the money then the lender/bank
can’t lend out the money that you were borrowing to someone else at the same rate that you are borrowing it for. This leads us
to a lesson that is very much true – the banks never lose. But, in all reality, they shouldn’t be expected to take a loss if you
agreed to borrow money from them for 5% and now they can only lend it out at 2%. Many people think that the banks/lenders are so
big that they can take the hit – They make billions anyway! Keep in mind you borrowed the money, if you didn’t want to play by their
rules then you shouldn’t have borrowed the money in the first place. Secondly, it is the banks/lenders that allow each of us to move
out of our parents homes before we’re 40 – because there is no way we could afford to buy a house in cash before then.
Now, you may have also heard about lenders/banks that charge 3 month payout penalties even when the rates have increased and they can
lend your money out for more of a profit. Again I bring you back to the fact that BANKS NEVER LOSE. I have absolutely no way
of explaining this. This just appears to be a money-grab to me and other Calgary mortgage brokers.
This article was written by Trevor Hickey, B.A. who is a Mortgage Associate in Calgary, Alberta, Canada.
Trevor Hickey, B.A.
Mortgage Associate
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Calgary, Alberta
T2E 2S7
Bus: (403) 290-1990
Cell: (403) 860-8738
Fax: 1-888-587-1426
Email: trevor@concordmortgage.ca
Popularity: 5% [?]
