RECEIVE EMAIL UPDATES:

RECEIVE EMAIL UPDATES:

SUBMIT YOUR EMAIL BELOW AND KEEP UP TO DATE WITH MY BLOG

Thursday, January 24, 2013

What are the A. B, C's ?


  

What are the A. B, C's ?

The major 6 Canadian Banks are the "A" Banks.....TD, BNS, BMO,CIBC, ROYAL, and National Bank. These banks have a presence at every corner.

The "B" Side are still banks, but there don't have a presence in the corner. They are available over the phone. Sometimes, the A banks talk bad about these banks and yet they tell you not to deal with them just in case if they shut down just like in the United States.

But the public needs to understand that these smaller banks, most often at times, are affiliated with the bigger banks. It is like Father and son. For example, President's choice is owned by CIBC. But banks tell you not to deal with them because it will shut down? It does not make any sense.

The B banks don't have buildings to pay rent and as a result their rates are cheaper than the bigger banks. Also their rules are not as tight as the A banks.

But if a client is not approved on the A nor B then there is the C side. The C side is private money from people like Mr. Manuel and Ms. Maria who will invest a mortgage with the client for 1 yr until the client gets their credit or income better.

We do most businesses with the banks because we understand that most people like construction workers don't have time to be on the telephone. They prefer to walk into a branch.

So it is important to understand, that we as mortgage brokers have access to all sides. A, B and C and we are here to help you at good times and bad.


For more information contact us at 
416-920-9931 or mortgages@eddiemac.ca

Visit us online at www.eddiemac.ca

Your Toronto Mortgage Broker
637 College Street, Suite 201, Toronto ON, M6G 1B5

Thursday, January 17, 2013

20 ways we cut costs last year


20 ways we cut costs last year

Robb Engen's house under construction in Lethbridge, Alberta. He saved for a 20 per cen downpayment before buying.
Robb Engen's house under construction in Lethbridge, Alberta. He saved for a 20 per cen downpayment before buying.
Robb Engen
Here’s how we did it: 
1.  We avoided CMHC mortgage insurance fees by saving over 20 per cent for our down payment.  This meant waiting to buy our dream home for 18 months while we saved our money, but it was worth it. 
2.  The variable interest rate on our mortgage is at prime minus 0.8, an ultra-low 2.2 per cent. 
3.  We turned down the mortgage life insurance offered by our bank, instead opting for much cheaper term life insurance. 
4.  We reduced our stock trading costs from $29 to $9.99 by combining accounts with one discount brokerage to reach their $50,000 minimum assets threshold. 
5.  We invest in low cost index funds instead of equity mutual funds.  For example, the management expense ratio on TD’s Canadian Index e-Series is 0.33 per cent compared with TD’s Canadian Equity mutual fund at 2.18 per cent.
6.  We use a cash back credit card for our everyday spending and recurring bill payments.  We earned over $500 using the MBNA Smart Cash MasterCard last year.
7.  We use a no-fee chequing account at ING Direct for payroll, debit purchases and online bill payments that can’t be put on a credit card.
8.  We keep a minimum balance of $1,500 in our TD chequing account to avoid bank fees.
9.  We ditched our landline three years ago, saving us almost $40 a month.
10.  We regularly call our cable and internet provider to ask for discounts.  We’ve saved over $300 on our cable and internet bills with this approach.
11.  I’ve negotiated with my employer to pay my cell phone bill, saving me $60 a month.
12.  We go to the library to borrow books and the latest DVD’s and Blue-Ray’s for free.
13.  We use e-post to manage our bills, which helps us to pay on time and avoid late fees.
14.  We make our own home cleaning products for simple wipe-downs and disinfecting using vinegar, water and rubbing alcohol.
15.  The cost of beef and chicken keeps going up.  We started eating a meatless dish at least once a week to save on groceries.
16.  We’ve avoided upgrading our second vehicle - a 14 year-old Hyundai Elantra - that still gets me to work and back.
17.  We dropped collision coverage and increased the deductible on our second vehicle to lower our car insurance premiums.
18.  When I shop online I hunt for online coupons and promo codes.  I had to buy a new battery for my Dell laptop and a quick search for Dell promo codes saved me $15.
19.  We signed up for free samples from Pampers and Huggies before our daughter was born and we use Proctor & Gamble’s Brand Saver site to get coupons for diapers and wipes.
20.  I avoid extended warranty coverage on electronics and other big ticket items.  Our credit card automatically doubles the manufacturer’s warranty.

Courtesy of: 
http://www.moneyville.ca/article/1315066--20-ways-we-cut-costs-last-year

Which Strategy is Best When it Comes to Buying Your First Home?


RRSP, TFSA or HBP: Which Strategy is Best When it Comes to Buying Your First Home?

Published on Monday January 21, 2013


Buying your first home can be an incredibly exciting time. Finding that perfect space and planning your life within its walls is a thrilling rite of passage you’ll remember forever.

But because it’s often the first major expenditure that someone has undertaken, buying for the first time can also be confusing. You’ve been diligent enough to squirrel away a significant nest egg to put towards your first home, but the question then becomes: What’s the most advantageous way to utilize those funds?

The Tax-Free Savings Account (TFSA) is often recommended as the savings vehicle of choice for young people. But when it comes to buying a home, should you transfer the money you have accumulated in your TFSA to a Registered Retirement Savings Plan (RRSP) and use the Home Buyers Plan (HBP) strategy?

So many options, so many questions.

First, a bit of background about how the Home Buyers’ Plan works:

With the HBP, first-time homebuyers can make a tax-free withdrawal of up to $25,000 from their RRSP ($50,000 when combined with a spouse) to use towards their new home.

However, to avoid taxation, the amount of principal withdrawn must be repaid over 15 years, starting two years after the withdrawal. The homebuyers will need to deposit at least 1/15 of the amount withdrawn from their RRSP on an annual basis. (This is the minimum payment; you can make additional payments without penalty.)

If you don’t contribute the minimum payment each year, the amount owing in any year will be included in your income and subject to tax.

At first glance, the idea of transferring your TFSA funds to an RRSP (assuming you have the RRSP contribution room) and then withdrawing them through the HBP program seems like a slam dunk: You get access to more funds for your first home and the opportunity to pay it back over 15 years, tax-free. Plus, you get a tax refund for your contribution to the RRSP, which you can also put towards your down payment.

However, a sharp investor might ask: Wouldn’t I be better off just leaving my funds in an RRSP and accumulating growth, especially if my rate of return is going to be more than my borrowing rate?

It is something to consider, says Marie C. Blanchet, Senior Consultant, National Bank Financial Planning. Because the principal is repaid interest-free to your own RRSP over 15 years, the lengthy repayment period has a negative effect on the RRSP’s growth.

As an example, a $25,000 RRSP would be worth $59,914 at the end of 15 years, assuming a 6% rate of return. However, if you took that $25,000 out to use it towards your home and repaid it gradually over 15 years, the RRSP would only be worth $39,019 at the end of the 15-year period.

However, the benefits of the HBP may still outweigh the shortfall, says Ms. Blanchet.

“Although it is clear that there will be less accumulated capital in the RRSP, the HBP basically presents three main advantages,” says Ms. Blanchet. “[It] creates immediate liquidity for the down payment, potentially reduces the insurance fee required by CMHC [Canadian Mortgage and Housing Corporation] and the reduced borrowing costs will increase your available cash flow.”

It’s that last point that makes up for the shortfall in the RRSP growth. If you withdraw $25,000 from your RRSP instead of borrowing $25,000, it will create a surplus of funds in your budget resulting from the reduced borrowing costs. Reinvesting this difference into a TFSA will mitigate the shortfall.

“When you pay back your HBP over 15 years and if you have made good use of the annual surplus generated, the impact (positive or negative) is never enough to upset your retirement plans,” says Ms. Blanchet.

“Often, being able to buy a home faster and enjoying a better quality of life is worth more than anything!”

If you do decide to take advantage of the HBP, however, don’t use this strategy as a pretext to buy a home worth $25,000 more than you can afford, warns Ms. Blanchet.

“It is still advisable to limit yourself to a reasonable purchase price based on your financial resources, with or without the HBP,” she says.

Of course, the best person to advise you on the various strategies when it comes time to become a homeowner is your financial advisor.

At National Bank, our advisors can help guide you through all the options available to you when buying your first home, and help you make the financial decisions that make the most sense to you.

Courtesy of:

http://www.thestar.com/specialsections/rrsp2013/article/1315150--rrsp-tfsa-or-hbp-which-strategy-is-best-when-it-comes-to-buying-your-first-home