Creating a fast mortgage repayment plan can save you a bundle. Having such a plan is itself a revolutionary idea. Action delivers guaranteed results. Here are key components to include that will save your mortgage dollars counted in the $100,000.00's.

New and revolutionary mortgage payment discoveries explain how Consumers in Canada, the United States, the UK, Australia and the Commonwealth, give away huge amounts of money, freely every week or month with each mortgage payment. In fact this is true around the world for almost all Borrowers. We pay our mortgages and loans on terms dictated by the Lender without the expertise of a new wave of professionals who specialize in turning debt and mortgage payments to the financial advantage of the Consumer.



This article is restricted to mortgage payment practices in Canada and the United States, since these are the mortgage markets most familiar to us. Lenders extend their loan repayment terms over 15, 25 and 30 years for maximum profits on the loan. Consumer Mortgage Repayment Specialists could shrink those profits by thousands of dollars depending on their experience and skill at saving you excessive and unnecessary payments. With some coaching, you too could divert new dollars to pay off the home loan in record time with big savings. You would create these savings from Mortgage over payment if you could reduce taxes, eliminate excessive interest charges and shrink other payments on the loan. Success with the new way to pay means an early end to payments for an extended number of months. These are payments that in fact, are entirely un-necessary but you think you must make because usually you follow the Lenders' Plan.

Canadians, for example, are allowed tax deductions for retirement savings, as business expenses, and as tax credits for the costs of money used for investment purposes. Unfortunately, many Consumers forgo these allowable tax deductions. These lost tax dollars could be utilized efficiently to reduce excessive mortgage interest payments.

Citizens and Residents of the United States of America too, as Borrowers, have become desensitized to this huge wastage in mortgage costs because of:

• Record low interest rates recently
• Rising house values followed by the sub-prime mortgage fiasco
• The fact that Americans can deduct interest costs on their taxes and
• Aggressive home equity loans by Banks and Mortgage Lenders so that the average North American Home has become a virtual ATM Machine loaded with instant cash available to the Home Owner to spend

As a result, Borrowers and Home Owners continue to add their hard earned dollars to huge Bank Profits, unwittingly. We lack fundamental knowledge about how best to make mortgage payments and home equity loans work in our best interests. New approaches to faster mortgage payments show results very early. Savings of $10,000.00 in one year are not uncommon. About $30,000.00 of savings after three years of payments is almost always achievable. Any good early, mortgage re-payment program can cause the disappearance of as many as 70 to 120 months of mortgage payments you no longer must make. In order to succeed, the Borrower must follow with discipline, a skilfully designed and specific fast mortgage repayment plan that applies money concepts differently.

This is a complex field. Consumers do not know which story to believe. How do you separate the genuine Mortgage-Payment Wiz-Kid" from the fraudulent, scam Artists and Pushers of get-rich-quick schemes that never work?

The News Media generally favors an easy and sensational story like credit card interest, pay day loans, or the recent surge in foreclosures. Academics, Statisticians and Researchers are not generally practical in their approach to these problems. Professionals in the Mortgage and Loans Industry have been funded largely by the Lending Establishment. Almost all of them, including the brightest ones work for Lenders. As a result, Consumers have been abandoned, left to the mercy of Bank Profits and Mortgage Loan Officers' fees. What compounds the problem even more is the multitude of self made "Specialists", who in fact know little about the subject. Many of those who comment on fast mortgage payment options may hardly have basic college level math. Some may not ever have had any practical experience in paying a mortgage. You are reading. So here's your mortgage how to tip.

The most important tool for use in designing a good mortgage repayment plan is an amortization schedule that lists all payments from Payment #1 to the Final Payment. To design a good plan, you must compare and contrast different repayment scenarios for that mortgage. The average Canadian mortgage contract is written so that the loan will be repaid in 300 Payments. American mortgages get repaid in 360 Monthly Payments, generally.

You must know and include the impact of related financial decisions such as taxes, retirement savings and investments etc. Even additional fees and costs must be considered. Three key components of your plan make a big difference in delivering dollars into your retirement account because of your skill in devising a clever mortgage repayment strategy:

The first of these components is the frequency of compounding and the frequency of payments. For example, Canadian Lenders do not exact a fee for changing from monthly payments to a bi-weekly mortgage repayment schedule. Many American Lenders charge such a fee. In Canada therefore, it is standard knowledge that you would reduce the number of years of payment from 25 to around 22 years by simply changing to a Bi-weekly mortgage payment schedule. A good plan from the new breed of Mortgage Payment Planners would pay off that mortgage in 10 to 12 years.

The second major planning component is the application of tax rules to benefit the Borrower. Our generous Uncle Sam allows US Taxpayers to deduct the interest on the mortgage loans on their homes to a maximum loan size of one million dollars. Canadian Mortgage Payment Planners, however, must distinguish themselves by devising various schemes to make the Canadian Mortgage Interest Tax deductible. Clever yet perfectly legitimate tax planning schemes could make a difference in your mortgage costs to the tune of tens if not hundreds of thousands of dollars.

Thirdly, a clever investment program that is closely integrated with the mortgage repayment plan could free you, the Borrower from loan payments much sooner and leave an Investment Account at the end.

Consumers have been diverted successfully to focus their attention on the low interest rate game. They are also enticed with other gimmicks such as interest-only payments, 100 percent financing, cash back from the mortgage at closing. These offers sedate and distract us from the real meaningful issues such as the time it would take to repay the entire loan. How much does the mortgage really cost? Such costs must be counted in before tax dollars and in after tax dollars. What are the penalties, fees and costs for early repayment?

A fast mortgage payment plan that ignores any of those three key components above is an Amateur’s Plan. Unfortunately, most mortgage pay off plans do not include such considerations. At the time of approvals and funding, Consumers become overwhelmed with the mortgage process. Even professionals, like dentists and doctors, teachers, nurses and police, even accountants and financial planners can be so intimidated with the experience that they accept the Lenders' Payment Plan without question.

That payment plan usually has a built-in, profit pool to be counted in the hundreds of thousands of dollars over the life of the mortgage. The new breed of Mortgage Payment Specialists knows how to design a Consumer friendly, Mortgage Payment Plan that integrates tax issues, compounding frequency and investments. All three components, when skilfully integrated into a mortgage payment plan, deliver savings counted in the hundreds of thousands of dollars over the life of the mortgage.

Already you can see that the overwhelming majority of Borrowers do not usually create their own specific, mortgage payment plan. Those who do would not have the tools to integrate tax planning, payment and compounding frequency, in addition to investments into their plan. So you must consult an expert who has those skills. Since space does not permit, we will end here. Later on, we will explore the real benefits of a Fast Mortgage Payment Plan. In another article, we will explain the magnitude of those savings in numbers the size of which once again are too often misunderstood.

Canada Mortgage and Housing Corporation (CMHC) is a Canada Government Crown Corporation which can provide insurance coverage on your mortgage in case of default.

That is if you can no longer service your mortgage and the lender incurred a loss as a result, Canada Mortgage and Housing Corporation will compensate the lender for the loss.

Canada Mortgage and Housing Corporation assists potential home buyers to purchase a home with little or no down payment sooner because you do not have to save for a downpayment.

Why do I need to buy mortgage insurance!

If you are borrowing 80% or less of the value of a property, you do not need to buy Canada Mortgage and Housing Corporation insurance.

If you are borrowing more than 80% (referred as High Ratio Mortgage), you must buy insurance coverage from a mortgage insurance company before any financial institution will lend you the money.

Canada Mortgage and Housing Corporation will provide insurance coverage, subject to borrowers meeting certain criteria, up to 100% of the value of a property.

Borrowers pay a premium ranging from 0.5% to 3.10% of the mortgage amount, depending on the loan to value ratio. The higher the ratio the higher is the premium.

There used to be a limit on the value of the property if it needs mortgage insurance. This requirement has now been eliminated and you can purchase a property of any value for mortgage insurance purposes.

Imagine what the premium will be on a $400,000.00 mortgage at maximum 3.1%. That's a cool $12,400.00. If you do not have the cash, the premium may be added to the mortgage amount and repayment spread over the amortization period chosen.

Genworth Financial Mortgage Insurance Company of Canada is a public company that can also provide default insurance coverage for high ratio mortgage.

For new mortgage the maximum amortization period is 25 years. Recently Canada Mortgage and Housing Corporation has extended the amortization period to 30 and 35 years at an additional premium of 0.25%. Genworth Financial Canada is offering a 30 year mortgage at a 0.2% premium and a 35 year mortgage at a 0.5% premium. The effect of a longer amortization period is that the monthly mortgage payment is reduced to a more affordable level for many borrowers.

Please note that you do not need to get in touch with CMHC or Genworth to apply for a mortgage insurance. Your mortgage broker or bank mortgage officer will apply on your behalf.

What is my chances of getting mortgage insurance?

If you have a good and proven track record, a good steady job, your income is sufficient to service your monthly mortgage payment and other debts, you have a good chance of getting approved.

The price or amount that someone pays for the transitory use of someone else's funds is called interest. Interest could also mean the payment that someone receives for giving up the ability to spend money temporarily for the purpose of lending the money to someone else.


The definitions clearly describe the relationship between a lender and a borrower. Lenders would not willingly allow anyone to borrow or allow him or herself the sacrifice of not spending money if there is no interest. On the other hand, borrowers would be only too happy to spend if they do not have to worry about interest rates.

The Bank of Canada should cut interest rates to a record low next week to stimulate the economy, a panel of private-sector economists said Thursday as evidence of a deepening recession - globally and in Canada - mounted, including a major drop in Canadian home sales and home prices.

The C.D. Howe Institute panel called for a further half-point cut next Tuesday in the bank's trendsetting target rate to one per cent. One of the 10 members called for a full-point reduction, and another for a whopping 1.25-point drop to just 0.25 per cen

The half-point recommended by the panel would likely trigger a matching cut in the chartered banks' blue-chip prime rate - to which business and consumer floating-rate loans, including mortgages, are tied - to three per cent from an already all-time low of 3.5 per cent.

The need for further housing-market stimulus was highlighted by the Canadian Real Estate Association, which reported that home sales in December fell 1.8 per cent from November to their lowest level since 2000.

And the average price of a home plunged 11 per cent from a year earlier in December, and was down for the year as a whole, ending the nine-year housing boom of steady price gains.

"Average prices will remain under pressure during the Canadian economic recession," warned association chief economist Gregory Klump.

"There has been a fundamental shift in consumer confidence, with job insecurities prevailing in every region Canada. That is unlikely to change until the worst of the recession is behind us."

The industry association appealed to the federal government to include measures in its Jan. 27 budget to stimulate housing, including an increase from $20,000 to $25,000 in the amount homebuyers can draw tax-free out of their RRSPs for a down payment, and expanding the provision to include more than just first-time home purchasers.

However, association president Calvin Lindberg cautioned that "moderating home prices in Canada should not be confused with the downturn in the U.S. housing market" that pushed that giant economy, and in turn the global and Canadian economy, into recession.

The U.S. recession is still deepening, reports Thursday suggested.

"Consumer sentiment reached a six-year low as Americans continued to be rocked by increasing job losses, poor holiday-shopping season reports, and the ongoing inability of the government and the private sector to stabilize the economy," RBC said in a report based on a survey of U.S. consumer attitudes and spending.

Considering the U.S. consumer accounts for 70 per cent of that economy's GDP, and the U.S. accounts for 75 per cent of Canadian exports, that doesn't bode well for Canadians either.

Still, there was a hint of hope amid the rubble of the RBC survey's findings - a marginal increase from 29 per cent to 30 per cent of respondents who expect their local economy will be stronger in six months' time.

The analysis said this may reflect an enthusiasm for soon-to-be-inaugurated U.S. president-elect Barack Obama and "Americans' openness to the stimulus proposals coming out of Washington rather than any expectation that local economies will improve quickly."

In light of the deepening slump in the U.S. economy and consumer confidence, it's not surprising the mood of Canadian exporters has also hit an all-time low.

But it was concerns about domestic sales prospects that weighed most heavily on exporters, Export Development Canada chief economist Peter Hall said Thursday in releasing results of the fall survey on the confidence of exporters.

Just 28 per cent - the lowest share ever by a wide margin - expected a near-term increase in domestic sales, while only 12 per cent expected an improvement in the domestic economy, while a record high 57 per cent expected a further deterioration.

"Over the past five years, exporters were able to count on a strong domestic market to tide them through the relentless rise in the Canadian dollar," Hall said.

"Last fall, that upbeat view of the domestic scene soured considerably."

Underscoring their pessimism about the domestic economy was news from Statistics Canada of a further seven per cent drop in new car sales in November, the steepest monthly plunge in three years.

Meanwhile, showing the growing global concern about the economic crisis was a decision by the anti-inflation-focused European Central Bank to cut its trendsetting interest rate to two per cent.

In Canada, the average price of homes sold via the MLS in November fell 9.8 per cent from the same month in 2007.

CANADA: -9.8%

St. John's: +30.8%
Saint John: +5.5%
Halifax-Dartmouth: +12.6%
Ottawa-Carleton: +7.3%
Toronto: -6.3%
Kitchener-Waterloo: +2.2%
Hamilton-Burlington: +6.3%
London-St. Thomas: +1.6%
Windsor: +3.4%
Winnipeg: +1.8%
Saskatoon: +10.9%
Regina: +27.6%
Edmonton: -2.0%
Calgary: -6.0%
Victoria: -12:4%
Vancouver: -11.6%

UNITED STATES: -18%

The price of single-family U.S. homes in the 20 largest metropolitan areas fell 18 per cent in October from a year earlier.

Las Vegas: -31.7%
New York: -7.5%
Cleveland: -6.2%
Portland: -10.1%
Dallas: -3.0%
Seattle: -10.2%
Miami: -29.0%
Tampa: -19.8%
Atlanta: -10.5%
Chicago: -10.8%
Boston: -6.0%
Detroit: -20.4%
Minneapolis: -16.3%
Charlotte: -4.5%
Phoenix: -32.7%
Los Angeles: -27.9%
San Diego: -26.7%
San Francisco: -31.0%
Denver: -5.2%
Washington: -18.7%

At Christmastime a year ago, Toronto-area realtors had good reason to celebrate. The year ended with record high sales and the industry never looked healthier.

"Home buyers had to stop at Chapters last year for reading material just to stand in line for a condo," says realtor Mike Donia. "The banks were lending you money hand over fist."

One year later the turnaround has been dramatic and unprecedented.

At the end of 2007 prices rose by 7 per cent and sales by 12 per cent over the previous year.

But in September, as the global credit crunch started to exact a toll, the Toronto market finally succumbed to a 3 per cent price decline, the first such drop in more than a decade. By the end of November, the average home was some $25,000 cheaper than it was during the same time last year.

"The swiftness of the change in real estate market conditions and market sentiment was quite surprising," says RBC senior economist Robert Hogue. "For most of us looking at where the GTA economy was heading it was fairly clear there would be some dampening, but over the last few months it looked as if the market just priced in all the problems at once."

Given the credit crunch on Wall Street that has spread to markets globally, the question remains as to how much further Canadian households will be affected in 2009? For the average homeowner, the worry is whether prices will fall further and, if so, by how much.

Economists missed calling the real estate decline by a wide margin, to the point that last month the Bank of Canada warned ominously that many Canadians were in danger of losing their homes if the economic crisis gets worse.

But how did we get to this point?

The mantra, repeated endlessly by the real estate industry and some analysts, was that Canada was largely isolated from the pain in the United States, and that high oil prices and a more conservative approach to lending had helped us to partially decouple from sectors of the global economy.

"We're fine – it's the rest of the world that has problems" seemed to be the key message over the past few years.

"Canadians have watched with amazement for nearly two years now at the collapse of the housing sector in the United States, the United Kingdom and other countries that experienced overvalued housing prices with the sense that markets in this country stand on more solid ground," says Hogue.

It wasn't until last year, when prices started to fall in western provinces that some economists started to question the strength of the Canadian housing market.

And while sales in Toronto fell every month last year compared with the previous year, prices seemed to be holding the line.

"We're fine – it's the western provinces that have the problems – they appreciated too far and too fast" seemed to be the consensus then.

Analysts forecast that, after a decade-long run, the Greater Toronto Area's real estate market would be in for a "soft landing," and they seemed to be right.

In January, sales were down by only 2 per cent – a rounding error compared with the record numbers of 2007.

As the year progressed, sales started to decline further, but more importantly for homeowners, prices didn't.

But since September, prices and sales started to fall. The most recent numbers from the Toronto Real Estate Board show that, in the first two weeks of December, there were 1,487 sales, or about 48 per cent less than the same time in 2007.

Most people are hoping this is just a blip on the way to greener pastures.

After all, the Canadian economy is still fundamentally sound. It's true that our export earnings, job growth and corporate balance sheets are better than other nations, and the Organization for Economic Co-operation and Development said last month that Canada will lead the G7 nations in economic recovery in 2010.

A lot, of course, depends on what happens to our neighbours to the south. A prolonged recession means that fewer Americans will be buying cars from Ontario or lumber from British Columbia.

During the last bubble, average prices of existing home in Toronto hit $280,000 in 1989 and took seven years to sink downward, hitting bottom in 1996 at $196,000 before taking off again in 1997.

No one expects this market to be as brutal, but then again, no one expected oil to be below $50 U.S. per barrel, and a Canadian dollar more than 20 per cent less than at the start of the year.

To see what's in store for this year, the Star asked some of the country's top economists what they thought 2009 would bring for the real estate market:

"The question is what kind of correction are we having?" asks Tal. "Are we seeing a U.S.-style meltdown, or simply a recessionary correction?"

Tal says that Canada never had a subprime problem in the league of the United States, which means a market correction here will be more moderate.

"What we have is the U.S. situation minus the subprime problem, which gives you Canada," says Tal. "It's not a freefall, but it will still be a recession.

"In that case it's reasonable to expect to see a notable decline in major cities."

Tal expects average prices across the country to fall another 10 to 12 per cent by the end of 2009.

"Is this a crisis? No. Is it pretty? Still no, and you will lose two years of price appreciation. But this is part of the economic cycle."

Tal predicts that there may be a slight uptick in sales in the spring but "nothing significant" as the market will continue to level off till the end of the year.

After 2009, he is forecasting that the market will "flatline" for three or possibly four years, with not much activity, similar to the 1992 to 1997 period in the Toronto market after the last real estate bubble burst.

The most immediate problem for the Toronto market is a potential oversupply of newly built condominiums, says the economist.

Condo pricing will lead the correction down, even as he expects some future supply to be cut as developers are unable to get financing for some projects. He is bullish on the condo market in the longer run of at least five to 10 years, because new immigrants and baby boomers still will be attracted to that form of housing, says Tal.

Carl Gomez
VP research, Bentall Capital

Canada's housing market is "modestly overvalued" with home prices needing to fall by as much as 25 to 30 per cent from the peak in Alberta and British Columbia, says Gomez.

Ontario prices, he figures, are about 10 per cent overvalued.

"The market is in correction phase, and the question is how far back will we continue to go?" asks Gomez.

Protracted job losses in the key Ontario market, for example, would mean further pain. And while manufacturing has been hit over the years, Toronto has been largely isolated from the problems because of its strong financial services sector, says Gomez.

"You are starting to see some problems in the services sector now. They have been a major driver of growth in Toronto, everything from banks to insurance companies to accountants and realtors. We haven't really seen this shoe drop yet, but if you see things coming off dramatically, then things will definitely get worse and prices will be pushed down further."

Like Tal, Gomez sees the most vulnerability in the Toronto condo market.

"In some pockets it's dominated by speculators. If they sense they are not getting the kind of return they want, they are the first to pull the plug," says Gomez.

Robert Hogue
Senior economist, RBC

The next few months will be significant to determine where the market is heading, says Hogue.

"But given the economic context where conditions have deteriorated quite significantly, you'd be hard pressed to see a quick recovery," he says. "For 2009 we will likely remain in a period of fairly soft sales and declining prices."

A housing affordability study prepared by Hogue shows that homes are becoming modestly more affordable in the Toronto market.

It takes 53.3 per cent of pre-tax earnings to afford a bungalow in the Toronto market. But that's still up from the long-term average of 48.3 per cent.

"That means you've got to have a decline in interest rates or prices of homes coming down to meet the long-term average."

Still, Toronto looks solid compared with some other Canadian cities, where the affordability index is 33 per cent higher than long-term averages for Vancouver and 40 per cent for Saskatoon.

Canada, the best performing among the G7 economies, is officially in recession and there will no growth in 2009, the country's top bank has said in a new report.


The Royal Bank of Canada (RBC), the country's number one bank, said the US downturn and credit squeeze have led Canada's economy into recession.

The economy will grow by 0.6 percent in 2008 and post no growth in 2009, the report released Friday said.

Craig Wright, senior vice-president and chief economist at the RBC, said the US economy has fallen into a deep recession, dragging the Canadian economy along.

"However, we expect the slowdown in Canada not to be as severe as in other countries since the imbalances plaguing other countries are more pronounced. We expect to see a moderate, though sustained, recovery in the second half of 2009," he said.

After six years of solid gain, the report said, falling commodity prices will cut domestic income that has supported consumer, business and government spending for the past several years.

The outlook for 2009 is very bleak as the combination of falling domestic income, credit squeeze, and a rising debt-to-asset ratio will curb consumer spending, it said.

The bank said though negative growth is only expected to last the next two quarters, its impact will be far reaching, with the unemployment rate climbing to 7.4 percent in 2009.

On the economic deterioration in the US which accounts for more than 85 percent of Canada's global trade, the report said the real GDP in America will decline by 1.5 percent in 2009 because of slower export growth and weakening in global economic activity.

Though the Bank of Canada has reduced the overnight rate to 1.5 percent to stimulate the economy, the report expects the rate to be further reduced to one percent as the economy enters the weakest period for growth.

Construction of new housing in Ottawa fell 36 per cent in November, led by big declines in townhouse units, Canada Mortgage and Housing Corp. said Monday.

Despite the big decline, housing starts are still running 7.7 per cent ahead of last year as builders put shovels in the ground for developments that were sold earlier in the year before sales of new units plunged this fall..

CMHC said that construction started on 492 units during the month, down from 769 units a year earlier. The big decline followed an unusually strong October in which Ottawa bucked a national decline in starts triggered by economic problems.

The number of new row housing units fell 61 per cent 108 units and single-family starts declined 31 per cent 266 units.

The declines were partly offset by increased construction of semi-detached and apartment units.

Despite a significandt decline in single-family housing starts to 266 units from 386 units a year earlier, it was still the single biggest generator of housing construction during November — a testamant to the fact that despite rising prices, buying a single-family unit is still more affordable here than in most big Canadian cities.

Sandra Perez Torres, senior Market Analyst at CMHC, said in a statement: “Single-detached construction is a better barometer of the health of the new construction market. After exceptional new construction activity in October, single detached construction still represented over half of total construction in November.

"Total housing foundations for this type of dwelling remained at a very high level, just marginally lower than last year’s numbers”, she said.