Inflationary Hedging:

Small steps lead to big results…………

Did you know that my goal is to complete an annual mortgage review with all of our clients?  During this review we discuss your current and future goals and how we can work together through your mortgage to help you achieve these.  One of the best tools we use to achieve your goals is we implement an Inflationary Hedging plan.

Inflationary hedging is our most effective strategy to help you repay your mortgage faster while at the same time protecting you against payment shock upon your mortgage renewal due to higher mortgage rates.  We achieve this through gradually increasing your mortgage payments over four years of your five year term so that by the time you are up for renewal your payments are the same as the projected renewal rate.

Inflationary Hedging example:

Our client John Smith has a $300 000 five year 3.0% fixed rate mortgage and we project a 5.0% renewal rate in five years.  At the beginning of year two of his mortgage we will increase John’s payments to reflect a rate of 3.5%, beginning of year three, 4.0%, year four 4.5% and at the beginning of year five we will be paying at a rate of 5.0%.

John’s monthly payments will gradually increase by only  $87 every year, from a starting payment of $1261 to and ending payment in year five of $1601.  This small increase will however result in a Significant Benefit for John.  In addition to protecting John’s budgeting against a large payment increase at renewal, John has also repaid an additional $10 477 toward his mortgage principal and reduced his remaining mortgage by ~two years!

Again……….Small steps lead to big results……………

Please feel free to contact me today so that we can start to work together on your customized inflationary hedging plan.