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Posted September 1, 20161 Comment Consumer Debt

Tax Free Savings Accounts should be 2nd on your list

There are over 10million TFSA accounts in Canada according to this article in the Financial Post. Wow, it’s great to see that level of savings….

But hold on…..is this the right strategy for those of us with a mortgage? Well, if you have a mortgage on your principal residence and the interest is not tax-deductible, then I think it’s NOT the right strategy.

For most of us, the interest on a residential mortgage is not tax deductible (I say for most of us because if you rent out part of the home or use it for your business then you may be able to claim a tax deduction).

Take those after-tax $$dollars and pay your mortgage first before putting them into a TFSA… reduce the amount of non-deductible debt and then focus on a TFSA…. If you own an investment property, then this strategy may vary slightly…. but for most of us, let’s get rid of that mortgage first…

And yeah, for those higher income earners looking to diversify, then sure.. A TFSA makes sense. But for most Canadians, I would suggest getting rid of the mortgage is a better strategy.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted July 29, 2016 Consumer Debt

Mortgage Brief… Homebuyer of the future.

This is the homebuyer of the future…

This past June, Mortgage Professionals Canada published their survey results on the Next Generation of Homebuyers.

Take note: Adults under the age of 40 who don’t currently own a home but expect to own in the future, if you are planning on buying, or help a child get into homeownership, these results can be an interesting comparison to your own situation. Here are some of the key findings:

52% are under 30 years old, 48% aged 30 to 39
55% single, 39% married/living with a partner
81% have no children
72% agree that mortgages are good debt, and 76% agree real estate is a good long-term investment. 58% are optimistic about the economy in the next 12 months.

The decision to buy is often influenced by key life events – start a family (33%), getting a promotion/raise (30%), getting married (29%), inheritance (8%).
Primary downpayment sources are personal savings (73%), gift/loan from a family member (36%), TFSA (33%) and RRSP (29%).
Average downpayment savings is $37,000 among imminent buyers.
Neighbourhood (61%), safety (58%), and potential for increase in value (50%) are the most important home features. Features that are considered to be worth a premium are nice neighbourhood (33%), short commute (31%) and safety (29%).

Continue reading “Mortgage Brief… Homebuyer of the future.”

Posted July 28, 20162 Comments Mortgage News

Mortgage Brief…BC’s 15% Foreign property tax coming to Toronto?

And it begins in Vancouver… the long-awaited, little debated foreign property tax is about to begin.

Foreigners wanting to buy in Vancouver will need to add 15% to the purchase price.. Put another way, this adds $150,000 to the purchase price of a $1,000,000 property.

The new tax begins August 2nd. The provincial BC govt says they want to ensure that home ownership remains within the reach of the middle class. And if it doesn’t then, they say, it has created a new revenue stream.

MY THOUGHTS… Continue reading “Mortgage Brief…BC’s 15% Foreign property tax coming to Toronto?”

Posted July 15, 2016 Interest rates

Mortgage Brief…Bank of Canada doesn’t change rate..

This week, the Bank of Canada Governor, Stephen Poloz, held rates steady. No increase or decrease. click here for BoC report.

The Bank of Canada meets 8 times a year, at preset meeting dates. The Target Rate is used by Canadian Banks to set their Prime rate. This also affects Variable rate mortgages and even influences short term rates.

Bad news is good news for mortgage rates. Inflation is under 2% (well below the 3% max that is needed before rates climb).. And the Canadian economic outlook is still not strong enough to support a potential rate increase.

So, for now, enjoy the low rates… actually, they’ll probably be around for a lot longer..

Remember, we are experiencing record low rates.. but this doesn’t mean we should all jump into a 5 yr fixed rate product.. We all have different wants, needs and goals.. Speak with a Mortgage Broker to get professional advice.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted June 21, 2016 Mortgage News

New record low fixed rates… how low can they go?

5 yr fixed rates just got better. With last weeks U.S. Fed chair, Janet Yellen, saying these low rates are the ‘new normal’, the markets reacted.

Bond yields are down and that has moved fixed rates lower. The best full featured, no handcuffs 5 yr fixed rate is 2.49% (yes, some fast closing specials exist but 2.49% is the best today). (oh, by the way, Yellen wasn’t the first govt rep to say this. Our own Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins, said this 2 yrs ago.. Go Canada!)

Hard to believe they keep going lower. Does that mean we should jump into a 5 yr fixed? For some, yes. But for many of us, no. For over a decade, I’ve recommended Variable rate or a short term priced products. History has proven that short term priced products result in lower cost to the borrower.

However, there is something to be said for peace of mind. Many of us want to set it and forget it. For those that can’t sleep at night or for those that are borrowing to invest, then perhaps, 5 yr fixed makes sense.

If you really want to know what’s best for you and your situation, you must speak with an unbiased mortgage professional. A Mortgage Broker doesn’t work for any one Bank. They work for you. They will give you unbiased, neutral advice and they can offer hundreds of different products.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca