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Rogers Group Financial (RGF) publishes a quarterly newsletter, The Financialist, which is written by the advisors of our firm. The articles are aimed at providing meaningful information relevant to the specific needs of our clients, and each covers a variety of topics (including specific investment strategies and the details of individual investment products).  The latest issues of The Financialist are below; for a complete archive and access to printable .pdf articles, please click here

Debt Management & Mortgage Services

The Financialist • Issue 133 • April 2017
BY MARK NEUFELD BA CFP CIM


If you are seeking a new mortgage, or have a mortgage that is coming up for renewal soon, then this article is for you.

The business of lending money

The debt business has been a huge growth sector within the financial services profession for several years. There are a number of reasons for this:

■ Easy lending policies coupled with a significant increase in the number of debt products available in the marketplace

■ Low interest rates

■ High levels of consumption as individuals accept higher levels of debt

■ In urban areas, to own a home you invariably have to accept a large mortgage.

Debt products (mortgages, lines of credit, credit cards) are available through a wide range of financial institutions with many options. So many that, at times, it is difficult to determine if you are receiving fair value.

Today, the difficulty is not necessarily in being able to acquire credit (or debt), it is: How do you make a good financing decision amongst such a broad range of options?

Why is debt management important?

A commonly overlooked and underemphasized area of financial planning is debt management. This may be in part due to the history of the lending business, which was traditionally the territory of major financial institutions such as banks and trust companies. In most cases, individuals seeking loans would have simply dealt with the financial institution with whom they had their bank accounts, and either accepted the “posted rate” or negotiated a slightly lower rate.

Today, the lending business has become very competitive. As such, your ability to reduce your debt servicing costs and increase your flexibility has never been better, due these competitive forces.

Mortgage Brokerage Services

Since mortgages represent the largest component of one’s consumer debt, it is in this area where financial planning can have the greatest impact and result in significant long-term interest savings.

By taking a financial planning approach to securing a mortgage and with the assistance of a mortgage broker, you can save time researching your options, attain professional and specialized advice and secure a competitive mortgage without any additional cost to you.

The following is a summary of our Debt Management service that we can provide:

1. Document your current debt position and new financing needs

2. Analyze your current debt position and provide projections on debt elimination

3. Provide strategies and recommendations on how to structure your mortgage

4. Refer you to a mortgage broker to assist with the implementation of a new mortgage or re-financing

The benefits of following this process are that:

■ You will receive debt management advice within the context of your overall financial plan

■ You will have access to a professional mortgage broker who will act as your liaison with major banks, credit unions, private lenders

■ You will secure a mortgage that suits your needs at the most favorable terms and conditions

■ The mortgage broker is independent, objective and works solely for you and therefore, has your best interests in mind

■ The rules surrounding the qualification requirements for securing a mortgage have become more stringent recently and a professional mortgage broker can help educate and navigate you through the changing landscape

■ Once the mortgage has been placed, you’ll receive from the mortgage broker ongoing support and professional guidance for the life of the mortgage

■ There is no cost to you. For the services and solution provided, the mortgage broker generally receives compensation from the lender who originates the mortgage. In most cases, a mortgage broker will share a portion of this compensation for referring a client to them. This compensates them for the time spent providing you with the initial debt analysis and strategy.

How much can you save?

Take the following example (based on mortgage rates at the time this article was written): Mortgage Amount: $300,000 to be paid back over 25 years

Average 5 Year Posted Rate: 4.64% compounded semi-annually

Average 5 Year Broker Rate: 2.69% compounded semi-annually

Mortgage rates courtesy of Mortgage Intelligence.

Result: Using the rate negotiated by a mortgage broker could save approximately $5,729 in interest in year one, or assuming the same rate differential over the life of the mortgage, the savings balloon to approximately $93,418!

Before you acquire or renew your mortgage, ask yourself if you are really getting the best value for your money.

Should you have any questions or wish to explore this further, just contact your Rogers Group Financial (RGF) advisory team.

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