Taking out some equity from your home to pay off higher interest debts can make sense!
80% is the magic number when looking to refinance. When seeking a refinance, the government will only allow you to pull out equity up to 80% of the value of the home. As an example: Current mortgage balance: $300,000 Current value of home: $400,000 80% of $400,000: $320,000 Amount of equity that can be withdrawn: $320,000 - $300,000 = $20,000
Here is an example of the math:
BEFORE REFINANCING:
$300,000 mortgage, 3% interest rate, 25 year amortization Payments: $1419.74 per month
Over 5 years: Principal paid: $41,607.99 Interest paid: $43,576.41
$20,000 credit card debt at 20% interest. Making the minimum payment over 5 years: $20,000 interest paid. Monthly interest payment: $333.00 (Not taking into account minimum principal that would be paid - just for illustration)
Total Payments: $1419.74 + $333 = $1753.07 per month.
Over 5 years: Principal paid: $41,607.99 Interest paid: $63,576.41
AFTER REFINANCING
Example #1
$320,000 mortgage, 3% interest, 25 year amortization Payments: $1,514.39 per month
Over 5 years: Principal Paid: $46,481.52 Interest Paid: $44,381.88
By combining the $20,000 in credit card debt into the mortgage, this person over the next 5 years would save $19,194.53 in interest and save $14,320.80 in payments.
Example #2
In order to pay the credit card down faster, they can reduce the amortization of the new $320,000 mortgage to match the old payment. $320,000 mortgage, 3% interest, 20 year, 4 month amortization Payments: $1,750.50 per month
Over 5 years: Principal Paid: $61,738.13 Interest paid: $43,291.87
By combining the credit cards into the mortgage and keeping the payments the same as they are currently, this person will save $20,284.54 interest over the 5 years and pay an extra $20,130 worth of principal.
Which means after 5 years they have paid the credit cards in full.
This is just a basic example, but it works with all types of unsecured debts. (car loans, lines of credit, personal loans)
If you'd like us to run the math for your specific situation, feel free to reach out to us!
Mark Norman has been one of the top Mortgage Professionals in the St. John's area since 2004. Since earning his Accredited Mortgage Professional (AMP) designation in 2006, Mark has been actively involved in the Canadian Mortgage Industry and has traveled all over Canada and the USA for conferences and professional development seminars, to ensure his clients are always implementing the best mortgage strategies and that they remain far ahead of the average borrower. No need to take his word for it though as many other media outlets have taken notice of his expert advice and have featured his articles in The Globe and Mail, Canadian Real Estate Magazine, Canadian Mortgage Professional magazine, and has been the recipient of the AMP Excellence award from Mortgage Professionals Canada. He is often seen on NTV, CBC News, and CBC Radio, and remians the "go to" voice in the media when changes are made to government mortgage regulations that affect Newfoundland borrowers.
Mark has built a long career on making sure clients get the correct mortgage product. One that's as unique and tailored for their individual situation. One size does not fit all, and his ability to whittle through the hundreds of products from dozens of banks and lenders in Canada means he can find more than just a great rate. (That's the easy part). Most borrowers think about solving today's problem, but it's the long game he redirects their focus on, and this is why his clients save thousands of dollars over bank clients. Mark is acutely aware all the secrets that your bank does NOT want you to know, including how to avoid big mortgage penalties in the future, or how to negotiate a better deal at renewal time. He leaves he leaves nothing on the table for lenders or banks and always makes sure his clients have options, not only today, but down the road when unexpected adjustments/changes need to be made.
Some of our most trusted lender partners include:
Mark and Wally made my first experience getting a mortgage and purchasing a home, an absolute amazing experience. Both of these individuals are super knowledgeable in their respective fields and are truly genuine when providing their advice and guidance. I would highly recommend NormanLane Real Estate to anyone who is in the market to purchase their first home. It was a completely seamless experience for me.
Juanita Dawn FordSeptember 20, 2017
We have purchased 3 homes and sold 1 home with Wally and Mark. All experiences have been unique in their own way but one thing that stayed consistent was the hard work and professionalism of NormanLane. Thank you for making our wishes come true and helping our home grow with our family.
Natasha GeorgeSeptember 20, 2017
Wally and Mark are amazing. We visited them because we were ready for change. Wally put us in what we can only describe as our dream home and in order to do that, we had to sell our home in a very quick time frame and he came through leaving us both very happy.
Mark got us a rate that the banks couldn't even come close to.
I would highly recommend both Wally and Mark to anyone looking to buy and/or sell!
Jason WhalenSeptember 20, 2017
We recently purchased our first home and NormanLane Real Estate was fantastic to deal with. Our Homebuying situation was a little out of the ordinary, and we were a bit stressed about it all coming together smoothly.However, Mark and Wally were there for us every step of the way. They made sure all of our questions and concerns were addressed and they made sure we avoided potential problems along the way. Their expertise and experience was an invaluable asset to us and ensured we were doing exactly what was required of us at the right times. The NormanLane System of having Mortgage Financing and Real Estate services all under one roof proved to be very convenient and saved us a lot of time and running around. It made for a smooth transaction with great communication between all the parties involved. I really can't imagine buying a house any other way. I highly recommend the services of Wally, Mark and the NormanLane Team. We'll certainly use them for all our real estate business ..... and you should too!
Jennifer & TerrySeptember 20, 2017
Working with Mark has been excellent and excited that he and Wally Lane have partnered together - what a great team! On two occasions that I have dealt with Mark with my property, he has worked hard to get the best deal for me, and secure rates that will and have saved me money over the course of my mortgage. Congrats guys and looking forward to working with you in the future!
Stephen LeeCo-owner of Mallard CottageJuly 30, 2015
Mark Norman assisted me with the purchase of my first home several years ago, since then he's been an excellent resource for up to date information on housing market and mortgage trends in Newfoundland. A partnership with with Wally Lane, who brings extensive real estate sales experience to the table makes complete sense. I have no doubt that they will be successful in this venture and will provide valuable assistance to many people along the way.
A. PenneyHR/RecruiterJuly 30, 2015
Mark has helped me with my last three mortgages and he has been able to give me excellent rates and service. I would recommend Mark to anyone who is looking for a mortgage, he looks after his clients and he even notified me when the rates went down to save me more money.
M. HynesJuly 30, 2015
We were really nervous about buying our first home but Mark Norman and his team walked us through the process and help put us at ease. They got us a mortgage that we could afford and their professionalism was second to none. I would, have and will continue to recommend Mark Norman!
K. NicholJuly 30, 2015
It's been a pleasure working with Mark and Wally.
Their dedication and professionalism enabled them to find the perfect house for us! Their enthusiasm reflects the love of their career, therefore showing much devotion and support towards their clients. Having said all of the above, we would highly recommend them both to our family and friends.
MJ Bryant and Christopher L.July 30, 2015
It was a real pleasure to work with Wally and Mark on the purchase of our first home. Instead of the process being stressful, they were reassuring, helpful and accommodating. Their knowledge of the market, immediate follow up, honesty, feedback, sensitivity and professionalism is top notch. We hope you know how amazing both of you are. We would, have and will continue to recommend 100% to anyone we know.
N. Parisi & K. MurrayJuly 30, 2015
Mark.... You are in numbers God!! Lol. You make everything so clear and seems so easy. You assisted us on not only the purchase of our first home, but also our second. And we wouldn't have it any other way! Wally... Thank you so much for all your help with the whole real estate process. You were always there to put the client first and you're such a wonderful person. Together you're both a wonderful team that I highly recommend. I thank you both so much for helping myself and Charles to our forever home. We appreciate it so much. Best of luck in the years to come.
M. McCarthyJuly 20, 2015
Excellent service Mark Norman and Wally Lane go above and beyond to help you with any aspect of your real estate and financial needs!
Craig BensonJuly 20, 2015
Great team to work with, took away all the stress we experienced in the past. Personable and easy to speak with.
Chris M.July 20, 2015
Top notch! Would recommend this team to all of my family and friends!
Nadine IvanyJuly 20, 2015
Mark and Wally went beyond expectations. They were both very professional and friendly. These guys sold our old home and found our new dream home. It was great having everything under one roof, they took care of everything. Amazing team, and always there to help and find a way to help you get what you want. The guys were always there to answer any questions we had, big or small. Thanks guys, your the best.
Jody H.July 20, 2015
Mark worked very long and hard to make my dream of home ownership a reality. He exhausted every avenue and didn't give up or lose hope!! I cannot thank Mark or Wally enough for being there every step of the way and answering all of my questions. My son Samuel and I thank you both for everything. You guys rock!!!!
Germaine W.July 20, 2015
Let the boys work their magic for you- You won't regret it! Professional, efficient and courteous.
