Using a Mortgage to Increase Your Savings

When you sign on the dotted line of a Mortgage Note, you power the country and change your life.

You change your life because by signing, you instantly create an automatic wealth building program which is the No.1 source of savings for most families.

Savings that otherwise you would never have, even when you are financially successful!

Putting money away is difficult

My dad was a very successful businessman. He and my grandfather owned and operated a large clothing factory in Chile and created one of the biggest men’s clothing brands in the country, sort of like what Brooks Brothers in the United States.

One night, I was sitting with my dad at the dinner table and he starts to tell me he has a lot of expenses and can't find a way to save any money.

I get curious, grab a pen and a piece of paper and persuade him to list his expenses and he does.

The total adds up to about $650,000 pesos per month, at a time when a very good salary for a top executive would have been about $200,000 pesos per month.

During that candid conversation with him, I realized a few things:

1) He personally—not his business, just him personally—he made over 3 times the salary of a successful executive. I didn't know that. 

2) To me as a teenager, $40,000 pesos was a fortune! Here we were talking about a number over 16 times that amount! Per month!

3) As he listed the expenses and told me what they were for and why he had to have them,  the most important realization I had was that: from his viewpoint, there was no way he could spend his money in any other way than how he was already spending it! 

From his viewpoint, he was trapped! There was no way out. And he could not solve the impasse.

Isn't that interesting?

Later in life, as an adult having to make my own money, I fully understood his predicament.

So when I say that saving money is hard, even for a very successful business owner, I have seen this in myself and in others close to me!

This is why a mortgage is such a fantastic tool.

Because:

You make the savings a necessary expense

Maybe you never looked at a mortgage that way, maybe to you it was a necessary evil! Maybe you thought that getting rid of it, as fast as possible, was the way to go! Or maybe it was not clear why a mortgage is such a great savings vehicle.

This is what a mortgage does for you:

1) Every month, a portion of your payment goes back to you in the form of more equity. This means, more of the home is yours. 

2) Every month, Uncle Same gives a deduction for the interest you pay, which reduces your taxes.

3) Every month, you control hundreds of thousands of dollars which, on average, appreciate with inflation.

4) Every month, the mortgage forces you to save, no matter what!

5) A mortgage frees you from the yoke of rent!

What? Isn't rent supposed to be a better option?

No way! If you are late by a mere 3 days, watch what happens! 

If you are late by 10 days, your life is already miserable with the threats you are receiving. And the extra late charges you have accumulated.

Then your landlord can and will increase your rent every year even when the economy tanks.

That is, if he does not evict you first—even if you did nothing wrong!

When you rent, you have very little control. All you do is buy 30 days into the future and you are at the mercy of the Landlord—you have neither freedom or flexibility.

By renting you build no future for yourself, because...you are building it for your Landlord! 

Compare renting to this:

a) A mortgage gives you a 15-day grace period!

b) A mortgage is fixed, regardless of the economy (provided that you have opted for a fixed-rate mortgage, of course!)

c) You get to decide when to move out!

d) A mortgage builds you a future and a legacy

e) A mortgage improves and builds your credit

In short, a mortgage gives you freedom! 

These are meaningful ways as to how a mortgage impacts your life.

But, that's not all

When you sign on the dotted line of a Mortgage Note, you create a financial instrument. 

This financial instrument is now combined with others to create another bigger financial instrument called a Mortgage Backed Security, or MBS. 

This MBS is bought by pension funds, banks, international investors and insurance companies. These companies need to put the money of their customers to work!  

The MBS is further used to create other securities such as: Exchange-Traded Funds (ETFs), Mutual Funds Shares/Stock which you or any other individual investor can then purchase at the retail level and make a return on.

A mortgage is powered by the people—us. By you creating it, you then allow everyone to participate and put their savings to work.

Far from being just a "bill," a mortgage allows society to put the collective savings to work while at the same time giving you financial freedom, a savings vehicle and a legacy to leave to your loved ones. 

All of this doesn't even take into account that your property might appreciate over time beyond inflation! That's another source of windfalls.

Qualifying for a mortgage is not that difficult

This is what you need:

• Some money saved as a downpayment. I recommend at least 10%

• Income stability for the past 2 years

• A not completely shot credit report

If you don't have all the above but would like to buy a property, we will help you get there!

It costs you nothing to run a scenario of how a mortgage could work for you. Feel free to self-schedule an appointment here.