Tag: Canadians

How To Learn The Total Costs Of Homeownership? FCAC Explained

How To Learn The Total Costs Of Home Ownership? Mortgage Cost Canada An OverviewWhen it comes to determine costs associated with homeownership, you’re mostly got an impression about how much your monthly mortgage payment will be when you take out a mortgage to buy a home. However, there are some hidden costs of homeownership that will add up in your monthly cost soon in the process. How much does it cost to own a house? Buying a home is an expensive that require you to find out your affordability, and or creditworthiness prior to taking out the mortgage loan. Here in this article you will find; how to learn the total costs of home ownership? Following is an overview on taking out and determine the true cost associated with the mortgage to buy a home in Canada, especially selected from Financial Consumer Agency of Canada that will help you in learning about the total costs associated to become a home owner; it’s brief and to the point:

Half of Canadians who plan to purchase a home think they will only need to cover the down payment to move in. The “closing costs” however, can add as much as another four percent of the total purchase price of the home

Closing costs can include:

  • legal or notary fees
  • land registration fees
  • municipal levies
  • surveys
  • appraisal fees
  • home inspection fees
  • utility hook-ups
  • title insurance
  • property tax and utility adjustments.

Additionally, if your down payment is less than 20 percent of the price, you will have to pay for mortgage default insurance plus the provincial sales tax charged on it.

For a $300,000 home, closing costs could range from $4,500 to $12,000. Other up-front payments that may be required include moving expenses and the real estate costs for selling your old home. Even redirecting your mail is an added expense.

A complete guide to the finances of home-buying is available on the website of the Financial Consumer Agency of Canada at ItPaysToKnow.gc.ca.

Source: Financial Consumer Agency of Canada (FCAC)
Date modified: 2015-06-30

How to save thousands of dollars in home financeing? There are various factors that can save you, where your real and total costs associated with your home ownership will determine your real savings, you may please consult your mortgage consultant to find one best deal for you. For more information and updates on “total costs of homeownership”, you may please go directly to the official website of Financial Consumer Agency of Canada (FCAC).

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Who Is Refresh Financial?

Refresh Financial Canada Exposed

Who Is Refresh Financial?

Refresh Financial is a small Canadian company devoted to changing the lives of Canadians for the better. You’ve probably heard a few organizations say that before, though, haven’t you? It’s kind of a buzz phrase. Does it even mean anything anymore when a company says they want to help change lives or is it just marketing fluff?

Well, this phrase actually means everything to us. We’re a people-focused company. In fact, people matter a great deal at Refresh Financial. We don’t just see the power in people, but we push for it. We really fight to bring out that power in each and every one of our clients. We fight for the little guy… and the big guy, and everyone in between. You see, to us, everyone deserves financial security, regardless of age, gender, country of origin or social standing. We see in you, no matter who are, the ability to create security for yourself. All you need are the right tools and a little support.

We’re not promising you effortless riches; we’re not selling some magic solution to all your financial woes. What we do, instead, is guide you through the savings process, and train you to meet your goals. It takes time. It takes patience. It takes work, but by the end of the process, you’ll be well on your way to living with financial security, decent credit, and room to finally sit back and breathe.

So, how does Refresh do this? With a credit building, secured savings program. As you pay into the program, we report back to the credit bureau that you’re making your payments. It’s important that during this process, you manage any and all other credit you may have elsewhere. Doing so will ensure that our positive reports to the credit bureau will help to build your credit score up. Each payment that is made is a boost to your credit and by the end of the process, not only do you get to keep the majority of the money you’ve saved up, but you’ve also got a better credit score.

We know you’re busy. We respect that, so not only have we set it up so that you can manage your Refresh program entirely online, but you also get access to our exclusive online F.I.T. program that you can use anytime, anywhere (there’s internet, that is!).

F.I.T. is Financial Intelligence Training. It might sound a little scary, but trust me, it’s not at all. It’s all online, and available to you, a Refresh customer, through short little videos that run between three to five minutes. You can watch them at your own pace and come away from them having learned a metric tonne about personal finance: from the most commonly believed myths, to successful goal setting, and even how to manage and build your wealth. Only our clients have access to this exclusive financial knowledge base, and only our clients can learn to be a money saving boss while enjoying the comfort of their own couch and the warmth of a cup of joe.

Our goal is pretty clear: we just want more Canadians to have a bright and stress-free financial future.

We’re pretty proud around here. Proud of the assistance we’ve offered to thousands of Canadians, proud to be able to offer you this unique and effective service, and proud to see our clients go on to achieve their financial goals. This isn’t just a great place to rebuild your credit, it’s also a really great place to work. Going home every day knowing that you spent the day working towards financial stability for many thousands of Canadians? It’s absolutely priceless.

I guess, to make a long story short, we’re transformation specialists here at Refresh. We believe in your potential to grow, learn and reach your goals. It’s really, really hard not to believe in the immense power of change when we see so many people do it, each and every day we come to work. No matter who you are, where you come from, or what your circumstances in life are, Refresh Financial has got your back.


Paying Off Debt vs Savings

Debt vs SavingsWe’re sick of hearing about the tough times that we’re living in. It was a good few years ago since the market crashed, and as people continue to look for solutions the debt or savings question can be a frequent debate. But, which makes more sense – paying off debt or savings? And how do Canadians go about defining their long-term financial policy?

Really, this is a no-brainer if you’re thinking about it off the bat. Getting rid of any debts that you have ensures that your possessions are not at risk and you know that you can’t be hit with a big interest bill. While it may feel nicer to have a few thousand dollars saved up, you have to think that money will be saved long-term if your debts are paid off now. But, when times are tough, we like to save. Debt vs Savings is what that financial industry pay most concern, let’s see how it help an ordinary person in getting a right path towards a better financial future.

Saving in Canada

The Tax Free Savings Account that was announced last year was applauded as a novel approach for helping the population to save. Receiving tax benefits, you are able to save up to $5,000 a year so long as you are aged 18 or older. What this meant to Canadians is that a substantial amount could be saved up – tax free – and this was big news.

But, what it also meant was that people started to take a look at GIC Investments. With the market crashed and more unpredictable than ever before, the stock market wasn’t the answer and Guaranteed Investment Certificates with their guaranteed return seemed a solution. What this meant is that taking the time to save in this way was financially rewarding for citizens creating an emergency fund.

How does this help the credit card problem?

Whether you like to save or not, there’s going to come a time when your debts need paying off. By getting a guaranteed return on your money, you will have a fund to call on, but what tends to happen is that the debts will soon pile up. So, while you stockpile in one place be sure to keep an eye on what is going on elsewhere on an issue to get an efficient decision while comparing between paying off debt vs savings in Canada.

Interest rates are your worry here, but if you can find the lowest APR and BTR credit cards online you will be able to move all your debts to make them more manageable. By planning an attack on your debts you will always be better placed to beat them. While we all want to be debt-free, paying them off can seem a thankless task. Two options include:

  • Change your outgoings – While this may sound obvious, it’s the easiest way to make a break towards being debt-free. Savings are important, but not when you have debts to pay. What you first need to do is use a service to enhance any saving accounts, lower what you need to pay on your credit cards and cut money from your mortgage rates. By cutting dollars off your monthly outgoings, you will have more to chip away at debts.
  • GIC Investment Loan – A great way to kick-start your savings, get money to fight your debts and boost your credit rating is through using a service like Lend It Financial. What you can through this method is re-establish credit history by getting a loan that is insured and invested into a GIC. From here you build a profile and earn money off your investment for an interest rate of around 12% from the company.

It’s funny how much better we feel knowing that there’s an emergency fund in a savings account, but by paying off debts now you will spend less in the long-term. While the right answer changes depending on circumstances, there are many things we all can do to lower our credit card debts to enjoy savings to hold for our future or invest it where it better grow.


Annual State Of The Residential Mortgage Market In Canada 2011 Brief Introduction

7th Annual State of the Residential Mortgage Market in Canada (ACCHA) November 2011 Prepared for Canadian Association of Accredited Mortgage Professionals (CAAMP) By Will Dunning CAAMP Chief EconomistThe Canadian Association of Accredited Mortgage Professionals released their “Annual State of the Residential Mortgage Market in Canada – November 2011”. According to the report the average mortgage growth is expected to be 7.3 per cent in 2012, beside, it is increasingly expected about mortgage interest rates that will remain low for a prolonged period, so Canadian consumer can get best mortgage rates in coming future. Here is the brief overlook of this report.

Introduction and Summary

This is the seventh annual report on the State of the Residential Mortgage Market in Canada. It has been prepared for the Canadian Association of Accredited Mortgage Professionals (“CAAMP”) by Will Dunning, Chief Economist of CAAMP. It provides an overview of the evolving state of the residential mortgage market in Canada. Major sections of this report are:

  • Introduction and Summary
  • Consumer Responses to Topical Questions
  • Consumer Choices and Satisfaction
  • Outlook for Residential Mortgage Lending

Data used in this report was obtained from various sources, including an online survey of 2,000 Canadians. More than one-half of the sample (1,031 Canadians) were home owners who have mortgages and/or other debt on their property. The remainder included renters, home owners without debts on their properties, or others who live with their families and are not responsible for mortgage payments or rents. The survey was conducted for CAAMP by Maritz (a national public opinion and market research firm) from October 20 to 25, 2011.

Consumer Responses to Topical Questions

In the Fall 2010 and 2011 editions of the CAAMP survey, consumers’ opinions were sought on several issues, related to housing and mortgages, that have taken on high profiles in the media. The consumers were asked to what extent they agree with various statements, on a 10-point scale: a response of 10 indicates that they agree completely with the statement and a response of 1 indicates they disagree completely. Average scores of 5.5 would indicate neutral opinions.

The table below summarizes the responses. Results are presented in substantially more detail in the body of the report (starting at Page 9).

For all of the questions, responses varied widely, and it is challenging to generalize about consumers’ attitudes. Highlights include:

  • The statement that found the highest degree of agreement (an average rating of 7.98 out of 10) is that “as a whole, Canadians have too much debt”. Almost one-half (46%) gave ratings of 9 or 10, showing very strong agreement with this statement. This, coincidentally or not, has been asserted repeatedly by senior government officials and other voices in the news media.
  • There is also agreement (average rating of 7.11 out of 10) that “low interest rates have meant that a lot of Canadians became homeowners over the past few years who should probably not be homeowners”.
  • However, different perspectives were found with several other questions.
  • There is a widespread opinion that “real estate in Canada is a good long-term investment”, which received the second highest rating, an average of 7.27 out of 10.
  • Furthermore, there was a high degree of agreement that mortgage debt is “good debt (7.07 out of 10).
  • In addition, in a statement that was asked for mortgage holders only, few agreed that “I regret taking on the size of mortgage I did”. The average score of 4.04 was well below neutral. Just 7% agreed strongly with the statement; 37% strongly disagreed.
  • Many Canadians believe that other people have taken on too much debt or have bought homes for which they are unprepared. But, when responses about their own situations are aggregated, most believe that they have been responsible. The contrast between these sets of responses is interesting. Actual behavior by people and their beliefs about their own behavior tells us more than does their beliefs about the behavior of other people: overall these responses suggest that prudence rules the land.
  • Meanwhile, data on mortgage arrears indicates that there are very few Canadians who are not meeting their mortgage obligations, and estimates developed in this report indicate that a vast majority of Canadian mortgage borrowers are well positioned to deal with potential increases of mortgage rates. Moreover, they are acting aggressively to pay off their mortgages, considerably more rapidly than they are required to.

Consumer Responses to Topical Questions
Average Responses (10 = Completely Agree)

Topic Fall 2011
Canada’s housing market is in a “bubble” 6.07
I am concerned about a downturn in Canada’s housing market in the next year 5.84
Canada’s superior banking system will shelter us from significant downturns like the one experienced by the United States 6.11
As a whole, Canadians have too much debt 7.98
House prices in my community are at a reasonable level 5.62
Low interest rates have meant that a lot of Canadians became home owners over the past few years who should probably not be home owners 7.01
I/My family would be well-positioned to weather a potential downturn in home prices 6.72
Real estate in Canada is a good long-term investment 7.27
I am optimistic about the economy in the coming 12 months 6.02
I regret taking on the size of mortgage I did 4.04
I am delaying my retirement until my mortgage is paid off 5.38
I would classify mortgages as “good debt” 7.07

Source: Maritz survey for CAAMP, Fall 2011.

Consumer Choices and Satisfaction

The survey found that Canadians remain highly satisfied with the terms of their mortgages, and their experiences in obtaining their mortgages:

  • 13% indicate they are completely satisfied with the terms of their mortgages (giving a rating of 10 out of 10) and a further 58% are satisfied (ratings of 7 to 9 out of 10). Combining these results, 71% are satisfied to some degree.
  • 21% give a neutral satisfaction rate (5 or 6 out of 10).
  • Just 8% are dissatisfied to some degree (1 to 4 out of 10).
  • On average, the satisfaction rate is 7.4 out of 10.

Satisfaction with mortgage experiences was very similar, and the average rating was fractionally higher, at 7.6 out of 10. Older age groups are more satisfied with their mortgages and their mortgage experiences than are younger age groups. There are some variations across different groups.

About one-third (32%) of home owners with mortgages had some form of mortgaging activity during the past 12 months: taking out a new mortgage (9%), or renewing or refinancing an existing mortgage (23%). The remainder (68%) did not have any mortgaging activity during the year.

Among those who renewed or refinanced an existing mortgage during the past 12 months, 21% changed lenders and 79% remained with the same lender. The rate of switching has edged upwards – two years ago it was 12%.

Concerning types of mortgages, fixed rate mortgages remain most popular (60%). A significant minority (31%) are variable and adjustable rate mortgages. For mortgages originated or renewed during the past year, an increased share (37%) has variable or adjustable rates. This shift may be due to the large spread between rates for fixed rate and variable rate mortgages (close to 2% during the past year). As well, it is increasingly expected that mortgage interest rates will remain low for a prolonged period. Both of these factors are encouraging borrowers to accept the risk that the payments will increase for variable rate mortgages.

With regard to mortgage amortization periods, 22% of mortgages in Canada have amortization periods of more than 25 years. The share is higher (38%) among home owners who, during 2011, took out a new mortgage on a newly-purchased home or condominium.

Looking at interest rates, the CAAMP/Maritz data indicates that:

  • The average mortgage interest rate for home owners’ mortgages is 3.92%, a drop from 4.22% a year earlier.
  • For borrowers who have renewed or refinanced a mortgage during the past year, their current average interest rate is lower (by 1.24 percentage points) than the rates prior to renewal. Among borrowers who renewed, a large majority (78%) saw reductions, a smaller proportion (13%) saw their rates rise, and 9% had no change. Based on the survey data, it is estimated that among 1.35 million mortgage borrowers who renewed or refinanced in the past year, the combined saving was $2.7 billion per year.

Mortgage rate discounting remains widespread in Canada. During the past year, the average “posted” rate for 5-year fixed rate mortgages was 5.38%. Discounted rates are estimated at an average of 3.92%, implying an average discount of 1.46 points.

Given concerns that have been expressed about consumers’ abilities to cope with potential rises in interest rates, this issue of CAAMP’s “Annual State of the Residential Mortgage Market” asked mortgage holders to indicate “the amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments”. The average amount of room is $750 per month on top of their current costs. A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates. There is a sizable minority (12%, or about 650,000 out of 5.80 million) who would be challenged by rate rises of less than 1%. However, most of these have fixed rate mortgages: by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced. Moreover, most of these borrowers (88%) have 10% (or more equity) in their homes. There are about 75,000 borrowers who are susceptible to short term moves of interest rates and have limited home equity – less than 2% of the 5.8 million mortgage holders in Canada.

This study asked questions that generated estimates of home owners’ equity.

  • The total value of owner-occupied housing in Canada is estimated at $3.017 trillion. Mortgages and lines of credit on these homes total $982 billion, leaving $2.035 trillion in home owners’ equity. The equity is equal to 68% of the total value of the housing.
  • Among home owners who have mortgages and/or lines of credit on their homes, 2% might have negative equity, and a further 4% have estimated equity of less than 10%. More than three-quarters (78%) have 25% or more equity.

The survey data indicates that 10% of mortgage borrowers took equity out of their home in the past year. The average amount is estimated at $49,000. These results imply that the total amount of equity take-out during the past year has been $28.5 billion. The most common use for the funds from equity take-out is debt consolidation and repayment, which accounted for $11 billion. This part of the total equity take-out would result in corresponding reductions for other forms of consumer debt. Home renovations accounted for about $5 billion of the equity take-out, with $6 billion for education and other spending, $3.5 billion for investments, and $3 billion for “other” purposes.

Among borrowers who have taken out a new mortgage during the past year, 52% obtained the mortgage from a bank, 32% from a mortgage broker, and 16% from other sources.

Outlook for Residential Mortgage Lending

Gradual recovery from the recession of 2008/09 has brought stabilization of housing activity, but at lower levels than pre-recession. The consensus of forecasts is for a continued moderate rate of job creation, which is expected to result in housing activity similar to recent levels, for both resales and new homes. These levels of activity are strong enough to support stable or slowly rising housing values: the average of forecasts is for house price growth of about 1% in 2012, a slowdown from the very strong growth of 7.7% expected for 2011.

As of this August, there is $1.079 trillion of residential mortgage credit outstanding in Canada. This includes both owner-occupied and investor-owned residential properties.

Based on the housing market forecasts, the volume of residential mortgage credit outstanding is forecast to continue expanding. Growth is forecast at about 7.7% during 2011 ($80 billion) and 7.3% in 2012 ($81 billion). A preliminary look at 2013 suggests growth of 7.0% ($83 billion).

While the forecasts for the economy, housing market, and mortgage market are encouraging, there is, as always, uncertainty about the outlook. In Canada, the largest risk factor for the mortgage market is “loss of ability to pay” (that is, job loss or a reduction of wages).

Data published by the Canadian Bankers Association shows that the gradual recovery from the recession is resulting in a gradually falling rate of mortgage arrears.

An increasing level of uncertainty about economic prospects is creating uncertainty about the outlook for the housing and mortgage markets.

The risk factor that gets the greatest amount of attention in Canada might be characterized as “an unaffordable rise in mortgage costs”. CAAMP’s research has repeatedly found that this is a negligible risk factor for Canada at present.

Thus, there are risks of outcomes worse than these forecasts. If that occurs, the cause will have been events in the broader economy. The US’s enormous economic difficulties started in the housing and mortgage markets. That will not be the case in Canada.

Looking for the full report, click here to download it from its official location (Canadian Association of Accredited Mortgage Professionals), its 34 pages PDF ebook that requires an Adobe Acrobat Reader to open the report. Source: Annual State of the Residential Mortgage Market in Canada, Nov 2011, CAAMP.

Disclaimer! This report has been compiled using data and sources that are believed to be reliable. CAAMP, Maritz, Will Dunning, and Will Dunning Inc. accept no responsibility for any data or conclusions contained herein. The opinions and conclusions in this report are those of the author and do not necessarily reflect those of CAAMP or Maritz.

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How To Set Financial Goals

Basics of financial planning and setting financial goals! Most of the people often face problem in managing their money in relation to how to make it. It may be your habit of overspending, taking too much credit and involving into variety of loans or it may be your bad luck but it feels really shocking when some one with good financial history descend into poverty and indeed into bankruptcy.

There are plenty of reasons that effects our personal finances, these are some of the interesting things which may come in your life that may require a great effort of money management financial to deal with. Some times it may be in our control but our impulsive behavior may not help us getting out of it and some times it may be our bad luck that may ask us to pay the price, in all its way you have to pay the price.

1:  According to the Statistics Canada’s latest reports 50% of married people go for a separation every year. In it’s latest finding nearly 70,000 were divorced where nearly 150,000 Canadians marrying every year. Among married couples, money management problems are the leading cause of separation and divorce.

2:  As we know superstars including celebrities and top athletes have to maintain their image in the public and for that reason they have to spend more. Although these people make millions but sometimes their heavy spending habits may loose them all.

3:  There are plenty of people who don’t care planning and rush them selves in getting things on loan and getting more than one credit cards without thinking about, these people are not fulfilling their dreams but ruining their real financial life while increasing their liabilities and threat being caught in the debt problems.

You will find plenty of money management strategies but I personally believe in saving rather than making more from it because in reality, a dollar saved is more than a dollar earned, since I have already paid taxes on the dollar I have already earned; “A dollar saved is a dollar earned”.

Setting  Up Your Financial Goal

Setting financial goals is a smart choice! Setting a financial goal is same as setting a personal goal for you self. For example, if you decide to become a doctor, you develop an action plan that will get you there. Where as when you set a financial goal, you define what you need and develop a plan for achieving it. You have a definite aim and a clear path for getting there in certain amount of time.

How to set financial goals is crucial but rewarding! Goals like “get out of debt” and or “become a millionaires” are very common among us that required your persistence approach and hard effort to accomplish. In order to achieve your financial goal a little discipline on your side is required that may create a balance between your goals and enjoyment while ensuring your future financial security. Here’s how you can set your financial goals to achieve that will definitely require some changes in your lifestyle as you set these goals.

Short-term financial goals should consist the things that require your immediate personal attention to carry on life, building relationship and making a foundation to carry on the best hope entering into a successful future. It should not consist high expenses and pressure on your budget because you will be spending it from you current income or very limited savings that you may set and achieve within one month to one year. Examples of short term financial goals may include purchasing a kitchen utility, gardening utility, parking lot, family vacation, birthday and holiday gifts beside you may also pay off your credit cards or other utility bills.

Mid-term financial goals are goals that you have set and want to achieve within one to five years. You have the savings and you can easily manage your expenses getting all those things to improve your lifestyle. Mid term financial goals are best for purchasing a new car, repairing and remodeling your home besides paying off all your credit cards too.

Long-term financial goals are goals that may require a big investment that will take five years and longer to achieve, and it will accomplish indeed with your long-term savings. Examples of long-term goals may include purchasing a house, mortgage, retirement savings, college education funds and etc.

Dividing your financial goals into above these three time phases will definitely help you in achieving success with your personal finances. Short term financial goals may help you a lot in developing confidence and smoothly adopting and setting up other mid term and long term financial goals because these short term financial planning require a very small budget although it also comes from your savings but in just a fraction of risk you will get chance to study and correct your mistakes and problems.

Believe me the process of financial goal setting is quite simple and easy to do it job. All it needs is you to adopt the way you can do it easily and then follow accordingly. Here are 6 key steps in financial goal setting that will definitely help you in setting goals for success:

6 Steps To Reaching Your Financial Goals:

  1. Set and write down while dividing all these into short-term, mid-term and long-term financial goals.
  2. Make a goal setting worksheet; set and write down the dates to start working on your financial goals and a time frame to achieve these financial goals.
  3. Create a detailed, realistic, specific, measurable and achievable action plan because documented goals are easier to track and assessment.
  4. Be flexible because sometimes it requires necessary adjustments to your goals and strategies.
  5. Periodically review your financial goals and evaluate progress, you can better manage it if you measure it prompt, that’s why set a reasonable period to review as monthly, quarterly or what ever you may think better in your case. Remember, minimum will be the assessment period minimum will be the damage that also takes little time to handle the problem.
  6. Increase your financial knowledge. Take the services of financial consultant or ask your friends who can guide you personal investment options. Read books, articles and other financial stuff to enhance and update your knowledge.

Remember if you will be not spending wisely these financial goal setting and planning will not help you that’s why try to control your self when especially buying on impulse. This may be an excellent tip if you put such merchandise or stuff on a waiting list like a month and between that check other alternatives to compare prices and other features of interest it hold before purchasing one for you. This way you will get two possibilities to go with, either you may have it on a reduced rates or you may also say no to the product because it may be possible you don’t actually need to buy it.


Canadian Government Announced New Mortgage Rules For 2011

Finance Minister Jim Flaherty Announced New Mortgage Rules For 2011Federal government tightens mortgage rules 2011 are seem to be like it been cracking down on Canadians’ ability to qualify for a mortgage, although on one side these changes will help hard-working Canadian families to save by investing in their homes and future but on the other hand Canadian government is shifting its insuring behavior entirely on lenders because risk of these loans will now be on the financial institutions that lend the money. Will these recent changes will slow down Canadian housing market 2011 while making it harder to buy a new home or consolidate debt into your mortgage?

On Monday, January 17th 2011, Finance Minister Jim Flaherty along with Natural Resources Minister Christian Paradis announced new mortgage rules while implementing 3 main changes with an intention to alleviate concerns over consumer debt, to help combat increasing household debt and to add further stability to the Canadian housing market.

According to Mr. Flaherty’s recorded announcement that you can also watch his live speech at a “live televised announcement”, here’s are some words specially elaborated for my blog readers, he said: “Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and help protect us from the worst of the global recession. Canada has a prudent mortgage market and responsible lending practices…, our governments ongoing monitoring and sound supervisory regime along with the traditionally cautiously prudent approach taken by Canadian financial institutions to mortgage lending has allowed Canada to maintain strong and secure housing and mortgage markets. This has also allowed Canada to avoid housing bubbles witnessed elsewhere.

The following additional measures were highlighted as the new Canadian mortgage rules specially amended for Canadian families to safeguard their future investment and household debt.

New Canadian Mortgage Rules Announced For 2011:

  1. The maximum amortization period for less than 20 percent down payments is reduced to 30 years from previously it was 35 years for government-backed insured mortgages. Adjustments on the new amortization limit will come into force on March 18, 2011.
  2. The maximum amount that can be borrowed when refinancing a mortgage is reduced to 85 percent from current 90 percent value of the home. This new refinancing limit will come into force on March 18, 2011.
  3. The federal government will withdraw its insurance backing for home equity lines of credit secured on homes (HELOCs). Government backing for home equity lines of credit, rules regarding the borrowing of funds that are secured by homes will end on April 18, 2011.

Canadian 2011 Mortgage Changes:

Change in Maximum Amortization Period! The purpose reduction in maximum amortization periods for mortgages is to allow mortgagors and borrowers to pay off their debt quickly as possible and thereby reducing the total interest payment they will pay on their loan, but on the other hand as their mortgages will be amortized over a shorter time period, it will result in increase of their monthly payments.

Change in Lower Maximum Refinancing To Loan to Value Ratio! The reduction of 5% on maximum amount that a Canadian can borrow to refinance their mortgages will definitely limit the debt amount a family can incur. On the other hand it is also expected to allow and encourage savings like families will only be able to borrow less, resulting as being a greater equity in their homes.

Change in Withdrawal of Government Insurance on Non Amortizing Lines of Credit Secured by Homes! The Canadian federal government will cease to insure home equity lines of credit where money is borrowed against a home for use other than to purchase or refinancing. According to the Finance Department in relation to rules regarding the borrowing of funds that are secured by homes have been shifted their responsibility on financial institutions to deal such loans and the government will not manage them because these home equity loans have risen in recent years resulting in more consumer debt and definitely more loan defaults. Where the federal government thinks its the best measure to further stabilize Canadian housing market. It is also expected these financial institutions and lenders will make it more efficient and productive while making their strict criteria for the grant of such loans.

Some Professional Voices About New Mortgage Rules

In the words of Mr. Avery Shenfeld, an Economist; likens the new rules to the government putting Canadians on “a debt diet” that would further protect against a U.S. style mortgage crisis. The finance minister’s announcement indicates an increasing concern in the federal government about the impact of consumer debt on the Canadian economy.

Frank Techar, president of personal and commercial banking at Bank of Montreal said, “The actions announced are prudent, measured, responsible and timely”.

Analysts from Scotia Capital suggested government regulation was the way to go in terms of curbing household appetite for credit as opposed to the Bank of Canada raising interest rates, which they said would be “imprudent” at this time.

Exceptions will be allowed after these new Canadian mortgage rules changes come into force, if necessary, to satisfy a home purchase or a sale and home financing agreement arranged before the above mentioned dates of March and April.

If you have remembered, back in 1999 when the CMHC would only insure mortgages for a maximum of 25 years federal government decided the Canadian housing market would be a great way to goose up the economy since it was working great in USA at that time. In 2005 the maximum amortization went to 30 years, in 2006 went to 35 years, in 2007 it went to 40 year terms with zero down with an intention to compete with private companies in the market. Today’s government worries about the debt load of the Canadian consumer that has shown up in most recent changes seems to be started in year 2008 when the maximum amortization went again back to where it was in year 2006 as 35 years. Does it mean government is trying to slowly taking away moisture without causing it prominent dry look?

You are welcome to share your own experience and opinion regarding mortgage new policy “The Canadian Government Announced New Mortgage Rules For 2011”. For the previous major mortgage rule changes and announcements you may check out here: Canadian Mortgage Rules October 2008 and Canadian Mortgage Rules April 2010.


New Government Backed Insured Mortgage Rules to Take Effect April 19

The Minister of Finance Jim Flaherty, on February 16th, announced new mortgage rules designed to ensure buyers can manage their debt of rising rates of interest, and to slow the speculation in real estate property.

Minister Flaherty commented on the mortgage issue:

“There is no clear evidence of a housing bubble, but we are taking proactive, prudent and cautious steps today to help prevent one. Our government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it.”

The new rules will come into force, on 19 April 2010; here is a brief overview changes apply to the government-backed insured mortgages:

  1. Borrowers should now be available at a fixed rate of five years even if they choose a mortgage loan with a lower interest rate and the short term. Rationale for the Government for this change is that it will help borrowers to prepare for a higher rate even if it can tighten home buyers purchasing power.  It remains unclear if borrowers must benefit rate posted five years or reduced the rate of five years.
  2. The maximum amount that Canadians can withdraw in their mortgage loans refinancing will be reduced to 90 per cent of the value of their homes instead of 95 per cent. Justification of the Government for this change is that it will help to ensure that accession to the property is a more efficient way to register.  The impact of this change is expected to be minimal as owners relatively little withdraw equity their houses to this extent.
  3. A minimum down payment deposit of 20 per cent will be required for Government backed mortgage insurance on properties that are non-owner occupied “purchased for speculation,” which means rental realistic.   While this measure is intended to hinder the speculative purchase of properties by reducing the buyers leverage effect, it will have an impact also on those buying real estate in general investment purposes.

Don’t forget to talk to your mortgage professional for the advice on the mortgage strategy that meets your needs and how these changes might affect you.


Understanding Your Credit History When Your Credit Report Shows Two Different Credit Scores

It’s a good idea to request a copy of your credit report also know as credit rating from the two credit-reporting agencies in Canada: Equifax and TransUnion, at least once a year to verify that your personal and financial information is up to date and correct, and to ensure that you have not been the victim of identity fraud. Its possible you may get different credit history with these two, because your credit information can be kept by more than one credit-reporting agency, and because those agencies do not necessarily share information, it’s important to check all two-credit reports carefully.

Its quite natural and people does understand well that there is always a possibility to get different credit history with the two different credit rating agencies working separately collecting data of every individual to build consumer credit files, some times errors and omissions do occur with each ones exclusive records but if transaction found in both records it is assumed that the record is correct but on the other hand if this transaction is false without the knowledge of consumer then it may be a fraud that happens to consumer record while using social insurance number or any such private identity documents, but what happens if you get two different credit histories with the same credit reporting agency for the same period, in deed it felt confusion but its been happening in Canada and most of the Canadians are not aware of it. Wikipedia is a great knowledge hub where you can find where its been highlighted as “More than One Credit History Per Person”.

How do you feel if same person gives you two different answers for your same question? It doesn’t happen only in Canada, but people can have more than one credit history in some other countries too. Reason behind this double credit history with the same credit rating company is, if person who already has applied for some sort of credit before obtaining a Social Insurance Number would come under two separate credit histories, one with SIN and one without SIN. This is due to the credit reporting structure in Canada. This can lead to two completely separate parallel histories, and often leads to inconsistencies (although typically the person in question will never notice the inconsistencies), because when a lender asks for someone’s credit report with SIN, what the lender gets is different from what he would have gotten if he asked the report without providing the SIN. This is because, contrary to popular belief, when someone gets a new SIN for whatever reason, the two credit files are never merged unless the person requests specifically. As a result, a record with SIN zeroed out is kept separately from a record with SIN. Note this happens without the person even knowing it.

Our social insurance number SIN plays a most important role in our life because it also authenticates our credit history. Most of the people don’t feel confident while using their SIN publicly, or submitting it through phone, mail or email. I have checked this question which most of the people do have in their mind with the Financial Consumer Agency of Canada on its website http://www.fcac.gc.ca, about this double credit history with or without SIN in the hope that it may highlight some important points for consumers to benefits but could not get the answer even its search engine doesn’t recognize these sentences, “Credit History with or without SIN” and “more than one Credit History per person”. Although this is highly recommended resource that Government of Canada offers to the general public that contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred, also offers free publication called Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents with explanations of the notations and codes that are used. As a Canadian resident, you can order your free copy by mail; available in both soft and hard paper bindings.

You have a choice of either Trans Union or Equifax as the Credit Bureau to obtain your credit check from, as both are equally effective. Trans Union is automated and available to you 24/7 in less than 2 minutes; Equifax is only available during business hours and generally takes between 5-15 minutes to upload to your account. Moreover, always check your credit history while providing your SIN, because it provides all the credit activities, which involve your social insurance number, you can also not even instantly detect frauds and threats to your credit file but report any inconsistency in timely manner. And if you are getting your credit history by online resource other than these credit rating companies, always check availability of secure server on specially form submitting page (website address bar should starts with “https://” and a small “lock sign” at the bottom bar of your computer screen) while submitting your social insurance number into the prescribed form used for the purpose.


How To Reduce Credit Card Debt?

Credit Card Debt Reduction Requires Persistence!

Continue rising in liability needs a continue and persistence approach to drop it down where we can afford or better handle it, anyhow mounting credit card debt is a problem for many Canadians beside United States, United Kingdom, Australia and other countries of the world these days. If you find that you’ve been in a habit of using your credit card to much that increase your spending, it makes sense to look into how to limit your exposure to credit card debt, and the stress that comes along with it.  Here are some suggestions that may help you in reducing your overspending:

  • Limit your cash advances.
  • Use your grace period of your credit card payment in your favor by knowing and managing it.
  • Try to pay off credit card debt in full monthly payment to avoid high interest costs.
  • Limit your credit card usage for a specified period of time to help you reduce credit card debt.
  • Make it your habit to spend only what you can pay off in a given month.
  • Make your dollar worth more by signing up for loyalty programs.
  • Make paying off debt a priority in your financial plan.
  • If you still find that you cannot pay down your credit card debt to your satisfaction, you may wish to consider a mortgage strategy to consolidate credit card debt at a lower interest rate. Debt consolidation is an effective way of credit card debt reduction i.e. consolidating debt from high APR credit cards to a low APR one. So this credit card debt reduction measure works by reducing the rate at which your credit card debt grows.

Besides these credit card debt reduction measures, there are other methods too for credit card debt reduction like you may ask indirectly to any debt professional for the professional guideline or directly go to your current credit card supplier for help in credit card debt reduction i.e. by lowering the APR. It might work out for you because it does for some people.

Getting into debt is simple but getting out of it really a difficult task. This holds good for any kind of debt, credit card debt reduction needs planning and discipline in the way you spend money. Moreover, your credit card is a facility primarily because it helps you to not to carry cash that could not to be fallen, stolen or theft by the others and you, yourself cant do what is right for you.


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