Hi everyone,
INTRO:
I am trying to help my Mother with her mortgage renewal, and I’m wondering if anyone may be able to help me, as I am not very experienced with this stuff.
FACTS:
First of all she is almost 70 years old, lives alone.
I’d say there is a 50% chance that within the next 2 years she will sell the house. (Which would incur a penalty on closed mortgages, as far as I know)
For the 50% chance that she doesn’t sell the house, there is a 50% chance that she might find a basement tenant. (Which would increase her monthly debt payments)
Her financials are as follows:
$1200/month of disposable income to make debt payments
$16500 of credit card debt @ 4%
$26000 of mortgage debt @ 2.99% closed fixed 4 year term with 15/15 privileges (which is expiring in Jan 2016)
Not sure what the new rate will be but it is probably similar to her last one.
(Source: http://www.scotiabank.com/ca/en/0,,1112,00.html)
Please let me know if I can provide you with any other relevant information that could help.
QUESTIONS:
1)What is the optimal debt repayment strategy for her? If it involves at mortgage pls let me know if open/closed/fixed/variable etc
2)Does the fact that she may very well sell the house soon effect how she should approach this renewal?
3)Any questions I should ask the mortgage person at the bank during the meeting?
If I am missing any important factors here please do let me know. Also if you have any other creative approaches I would love to hear them. Although, I’m not really looking for advice regarding whether or not she should sell the house, or find a tenant, as I have already covered those topics in other posts where everyone here was very helpful.
IDEAS:
I’m thinking the debt should definitely be consolidated right?
Consolidate debt to Mortgage?
Pros: Probably a lower rate than her CC saving ~$750 in total on interest compared to CC consolidation
Cons: Less flexibility than CC and possibly a penalty if she sells
Consolidate debt to CC?
Pros: Increased flexibility in case she wants to sell house or increase payments
Cons: A rate slightly higher than the mortgage would be, but still not really that much higher.
Consolidate debt to new MBNA promotional 0% CC?
(source:https://apply.mbna.ca/applicationform/generateApplicationForm.htm?src=CQOR01&locale=en_CA)
Pros: They run this promotion every year, so if I do it every year for 3 years for her she will save ~$2000 vs 4% cc, and ~$1500 vs 3% mortgage plus more flexibility. Even if I only do this for one year and then put it back on the 4% at the end of the promotion she will still save money compared to the mortgage consolidation and have more flexibility.
Cons: This is my mom, she is older, and sometime it is just better to keep things simple. Also this means more work for me, applying for the card, making sure she makes the payments on time otherwise the promotional rate ends, and paying it off at the end of the year and transferring it back etc
Or is there anything else I am missing?
OK THANKS SO MUCH for reading and for anyone who responds, this would be a great XMAS gift for me and my mom!
INTRO:
I am trying to help my Mother with her mortgage renewal, and I’m wondering if anyone may be able to help me, as I am not very experienced with this stuff.
FACTS:
First of all she is almost 70 years old, lives alone.
I’d say there is a 50% chance that within the next 2 years she will sell the house. (Which would incur a penalty on closed mortgages, as far as I know)
For the 50% chance that she doesn’t sell the house, there is a 50% chance that she might find a basement tenant. (Which would increase her monthly debt payments)
Her financials are as follows:
$1200/month of disposable income to make debt payments
$16500 of credit card debt @ 4%
$26000 of mortgage debt @ 2.99% closed fixed 4 year term with 15/15 privileges (which is expiring in Jan 2016)
Not sure what the new rate will be but it is probably similar to her last one.
(Source: http://www.scotiabank.com/ca/en/0,,1112,00.html)
Please let me know if I can provide you with any other relevant information that could help.
QUESTIONS:
1)What is the optimal debt repayment strategy for her? If it involves at mortgage pls let me know if open/closed/fixed/variable etc
2)Does the fact that she may very well sell the house soon effect how she should approach this renewal?
3)Any questions I should ask the mortgage person at the bank during the meeting?
If I am missing any important factors here please do let me know. Also if you have any other creative approaches I would love to hear them. Although, I’m not really looking for advice regarding whether or not she should sell the house, or find a tenant, as I have already covered those topics in other posts where everyone here was very helpful.
IDEAS:
I’m thinking the debt should definitely be consolidated right?
Consolidate debt to Mortgage?
Pros: Probably a lower rate than her CC saving ~$750 in total on interest compared to CC consolidation
Cons: Less flexibility than CC and possibly a penalty if she sells
Consolidate debt to CC?
Pros: Increased flexibility in case she wants to sell house or increase payments
Cons: A rate slightly higher than the mortgage would be, but still not really that much higher.
Consolidate debt to new MBNA promotional 0% CC?
(source:https://apply.mbna.ca/applicationform/generateApplicationForm.htm?src=CQOR01&locale=en_CA)
Pros: They run this promotion every year, so if I do it every year for 3 years for her she will save ~$2000 vs 4% cc, and ~$1500 vs 3% mortgage plus more flexibility. Even if I only do this for one year and then put it back on the 4% at the end of the promotion she will still save money compared to the mortgage consolidation and have more flexibility.
Cons: This is my mom, she is older, and sometime it is just better to keep things simple. Also this means more work for me, applying for the card, making sure she makes the payments on time otherwise the promotional rate ends, and paying it off at the end of the year and transferring it back etc
Or is there anything else I am missing?
OK THANKS SO MUCH for reading and for anyone who responds, this would be a great XMAS gift for me and my mom!