In my 14 years of mortgage brokering I have never come across a better true life example of the wonderful story of a client of mine that I would like to share with you now. Their names have been protected but I can assure you that this story is true.
They came to me 5 years ago looking to get approved to refinance their high interest mortgage that they obtained on their own that allowed them to buy their first home.
They were a young family of 4. He had been working on a 2 year contract for Honda and she was employed as a clerk at local retail store. His income was approximately $70,000 per year and hers was approximately $35,000. Their mortgage balance was at the time $200,000.
I managed to get them out of a 5.5% PC financial mortgage and into a 2.15% RMG variable mortgage based on the then available 35 year amortization. The 35 year amortization is not for everyone but recognizing that this family was very financially responsible it was the best choice for them. The mortgage terms allowed them to cash flow approximately $400 extra per month.
I knew they were responsible with their money as they had already managed to save $50,000 and had no debt other than the mortgage. Their cars were bought and paid for.
The extra cash flow would allow them to save more money or provide a safety net in case of future job loss.
Only months after the mortgage closed the husband was laid off. The family had to survive solely on mom’s income while dad looked for another job.
Having the low mortgage payment and some savings gave them comfort. Not long after, being a smart young man, he landed another factory job but at a starting wage of only half of his previous.
The family was now living on household income of $70,000 per year. Fast forward 5 years later after the original refinance of their mortgage. He has been promoted up the ladder at work where he now earns $70,000 and she is a stay at home mom looking after three children. Their mortgage balance is $180,000 and they still do not owe a penny to anyone.
Their savings are now at over $90,000 and they are renewing into a new 4 year mortgage at a rate of 2.55%.
I was intrigued by their storey and asked if I could share their life style with those of you that are finding it hard to make ends meet. Here is what I learned..
In their own words:
“We only use one major credit card- and it gives us a % back on every purchase. We then take the rebate cheque and apply that cash to Christmas presents.
When we do use our credit card we try to come home and pay the purchase off right away. This helps us get money back for the purchase but also makes us responsible purchasers. This way we know we can afford it and we do not incur interest payments.
We always pay our credit cards off each month.
We do not eat out or do take outs.
We buy our cars-we don’t finance them.
We only bought the house that we could afford. We did not want to be house rich and cash poor.”
They subscribe to Netflix – no cable
No cell phones
They have a line of credit available in case of emergencies. Something I highly recommend to all my clients with a No fee chequing account
They buy their groceries in bulk from costco
Kids – sports – They are enrolled in swimming ,dancing , hockey, and have a membership at the ymca
Holidays – The family camps all summer – she is with them all summer. He joins them for his two weeks of holidays and after work.
Car loans -$0
Christmas – this shopping is done all year and is completed no later than the end of October.
She is constantly bargain hunting
What can I say. This works!
David Chilton and our finance minister would be very proud to hear of their accomplishments. I am also very proud that they have selected me as their mortgage broker to hunt them down the best mortgage and to provide them with the best financial advice I could.
The line of credit is something I also preach and because I see the value in this I have hunted down and can now offer the same to all of my clients with a very exclusive bank account that offers a high interest savings account, no fee chequing and low interest unsecured line of credit. A low manageable mortgage payment and a safety net in the line of credit are musts in each households financial arsenal.
Congratulations to them! If you would like the same line of credit security, if the 35 year amortization suits you or would like to discuss your own personal finance feel free to call me anytime. I would love to try and help you accomplish the same scenario. my cell phone is 705 623 8658.