One family’s strategy for getting out of debt + MORE Feb 7th

(Illustration by Ryan Inzara, iStock)
At first glance, it’s difficult to see why Francesca Nazario is so worried about money. She and her husband Guy, both 36, own a three-bedroom bungalow in Whitby, Ont., an hour’s drive from Toronto. They have two young kids—Amelia, 3, and Sam, 15 months—and a combined income of $130,000 a year.
But Francesca, who earns $50,000 a year as a secretary with a small manufacturing company, feels that she and Guy aren’t in control of their finances. The clearest evidence of this is the $42,000 of personal debt they’ve accumulated—and that’s on top of the $350,000 mortgage and the $20,000 they still owe on Guy’s 2016 taxes for his consulting business. “We’re making decent money but we’re going deeper and deeper into debt,” says Francesca. “Why can’t we make our finances work?”
The Nazarios (whose names we’ve changed to protect privacy) aren’t frivolous with their money. They bought their home four years ago in a nice subdivision…

You’ve got to envy the Danish. Or, upon closer inspection, maybe not.

Mortgage rates at Denmark’s two largest lenders have fallen below zero, effectively giving homebuyers there interest-free mortgages.

Danske Bank’s mortgage arm, Realkredit, has dropped its mortgage rate to minus-0.07 per cent, while Nykredit’s mortgage rate has dropped to minus-0.08 per cent, Bloomberg reports.

This doesn’t necessarily mean homebuyers will get paid for holding a mortgage, as there are additional fees homebuyers have to pay lenders. But some Danish borrowers did get paid to take mortgages last year, in the wake of Brexit, which caused interest rates to dip.

The Isbjerget residential complex in Aarhus, Denmark. (Photo: Villy Fink Isaksen/Creative Commons)

Negative rates make Denmark richer — and more unequal

Denmark has had a negative benchmark deposit rate for nearly five years, the longest of the handful of countries where rates are negative. The rate currently sits at minus-0.65 per cent…

I should have known something was up when the mortgage rep at my local bank wouldn’t tell me what interest rate the bank was offering me on a fixed-rate loan.

“I want to lock in the longest possible sub-3 per cent rate,” I told the employee of a major Canadian bank which shall remain nameless.

“Why?” he asked. “You can get a much better rate for a variable-rate mortgage.” And then he proceeded to show me how I would save big money if I made payments on a variable-rate mortgage. When I walked out of the bank half an hour later, head spinning with numbers, I still didn’t know what my bank was charging on a fixed-rate mortgage.

I wasn’t having any of it. Having spent years writing about residential real estate and financial markets, I saw this variable mortgage idea for what it could end up being: A trap, and one set for me by my own bank. Here’s why.

Mortgage lenders say Canadians are finding variable-rate mortgages more attractive today, even though this is could prove to be one of the worst times possible to get one…