Tips to Get Approved for a Mortgage

If your home ownership fantasies have been rudely awakened by loan officers denying your application, it’s time to take control of your situation and learn what you can do to turn that rejection into an approval.

What are your options? Everyone’s financial situation is unique. With that in mind, here are five different options for making your homeownership dreams a reality.

1. Get a Co-signer

If your income isn’t high enough to qualify for the loan you need and if you can find a co-signer with enough disposable income, part of that person’s income can be considered toward your loan amount regardless of whether
the person will actually be living with you or helping you pay the bill. In some cases, a co-signer may also be able to compensate for your less-than-perfect credit. Overall, the co-signer is guaranteeing the lender that your mortgage payments will be paid. If you decide to go this route, just make sure that both of you understand the financial and legal obligations the co-signer takes on when he or she signs the loan documents.

2. Wait

Sometimes conditions in the economy, the housing market or lending business make lenders less generous with loans. If you’re in a climate where everyone is panicking, then it may be best to wait things out. When conditions improve, lenders may become more accommodating. In the meantime, you can work on improving your credit score, reducing your debt and increasing your savings. While you’re waiting, home prices or interest rates could drop. Either of these changes could also improve your mortgage eligibility.

3. Set your Sights on a Less-Expensive Property

If you can’t qualify for the amount of mortgage you want and you aren’t willing to wait, switching to a condo or townhouse instead of a house, accepting fewer bedrooms or bathrooms, or moving to a less attractive or more
distant neighbourhood may give you more options. As a more drastic option, you could even move to a different part of the country where the cost of home ownership is lower. When your financial situation improves down the road you might be able to trade up to the property, neighborhood or city where you hope to end up.

4. Ask the Lender for an Exception

Believe it or not, it is possible to ask the lender to send your file to someone else within the company for a second opinion on a rejected loan application. In asking for an exception, you'll need to have a very good reason, and you'll need to write a carefully worded letter defending your case. Your letter should avoid excuses and sob stories and focus only on the facts. Explain how the incident that is preventing your loan from being approved, such as a charged-off account, was a one-time event that will never occur again. This one-time event should have been caused by a catastrophe such as a large and unexpected medical expense, natural disaster, divorce or death in the family. The blemish on your record will actually need to have been a one-time event, and you'll need to be able to
back your story up with an otherwise flawless credit history.

5. Team Up With Someone Else

Two incomes are better than one, so if you can't qualify on your own, perhaps you have a family member or friend that you trust enough and like enough to make a major purchase with and live with. It won't be enough to just put them on the loan, of course - they'll need to actually help with the mortgage payments to make it work, and chances are they won't want to pay half the mortgage unless they're living in the new home with you.

Conclusion

To go from rejected to pre-approved, it's important to know what lenders are looking for in an applicant. If you've been turned down for a mortgage, make sure to ask your mortgage professional plenty of questions about things
you could do in your specific situation to make yourself a more attractive loan candidate. With time, patience, hard work and a little luck, you should be able to turn the situation around and become a residential property owner.

Tips to Get Approved for a Mortgage

Bank of Canada maintains overnight rate target at 1 per cent

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.
The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.
Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered. 
Information note:
The next scheduled date for announcing the overnight rate target is 18 January 2011. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 19 January 2011.

http://www.okanaganmortgages.com

Bank of Canada maintains overnight rate target at 1 per cent

What is the Buyer Protection Plan ?

The Buyer Protection Plan (BPP) was developed by Calgary Mortgage Trainer, Greg Williamson of 180 Degrees Solutions.  Williamson says the Buyer Protection Plan is based on the fact that home buying is a decision based on emotion and the fear of falling prices and rising interest rates cause potential buyers to retreat.

 

Interest rates are expected to rise over the next 5 years after record lows.  The Interest Rate Protection program provides the buyer with protection from payment shock when the mortgage comes due in 5 years.  This strategy also saves the buyer thousands of dollars by paying off the principal faster.

 

The Buyer Protection Plan  protects home buyers if the home they buy falls in value after 12 months.  This drop in value is measured by comparing the Median MLS Sales Price of similar homes in the same area both on the date the offer is made and then one year later.  The Buyer Protection Plan provides up to a 10% price protection to the buyer.

 

For example suppose a home sold for $500,000 and the seller agrees to put 5% or $25,000 into a trust account to protect the buyer:

 

-if prices fall 5% or more in 1 year the buyer would get $25,000

-if prices fall but are back up or increase in 1 year the vendor would get the $25,000

-if prices fall 3% in 1 year then the buyer gets (3/5 X 25,000) $15,000 and the vendor gets (2/5 x 25,000) $10,000

 

Whoever gets the money from the trust account pays an administration fee of $499 plus HST.

 

The buyer and seller enter into a Buyer Protection Plan agreement which is referred to in the Offer to Purchase and 180 Degrees Solutions looks after the rest:

 

-setting up the trust account to guarantee the rebate if prices drop

- contacting the BPP approved lawyer to hold the funds for 1 year and issue cheques

- provide copies of the legal agreement

- assisting in the approval of the buyer with the BPP approved lenders and insurers

 

To offer the  Buyer Protection Plan (BPP) to vendors, a real estate agent must apply to a Certified  Mortgage Agents for the BPP.  There is no cost for realtors for this service and the realtor receives his/her own website.  The realtor also receives a web page for each listing as well as marketing material.  The marketing material includes videos to present to buyers and sellers as well as promotional ideas for offering the BPP on listings.

 

Please contact Laurie Baird or Scott Mason at (250) 862 1806, your Certified Buyer Protection Plan Mortgage Brokers. and visit our site at www.buyerprotectionplan.ca/broker/laurie-baird

Okanagan Mortgages

 

What is the Buyer Protection Plan ?

Bank of Canada Maintains Overnight Rate Target at 1 Per Cent.

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economic recovery is entering a new phase. In advanced economies, temporary factors supporting growth in 2010 - such as the inventory cycle and pent-up demand - have largely run their course and fiscal stimulus will shift to fiscal consolidation over the projection horizon. While the Bank expects that private demand in advanced economies will become sufficiently entrenched to sustain the recovery, the combination of difficult labour market dynamics and ongoing deleveraging in many advanced economies is expected to moderate the pace of growth relative to prior expectations. These factors will contribute to a weaker-than-projected recovery in the United States in particular. Growth in emerging-market economies is expected to ease to a more sustainable pace as fiscal and monetary policies are tightened. Heightened tensions in currency markets and related risks associated with global imbalances could result in a more protracted and difficult global recovery.
The economic outlook for Canada has changed. The Bank expects the economic recovery to be more gradual than it had projected in its July Monetary Policy Report, with growth of 3.0 per cent in 2010, 2.3 per cent in 2011, and 2.6 per cent in 2012. This more modest growth profile reflects a more gradual global recovery and a more subdued profile for household spending. With housing activity declining markedly as anticipated and household debt considerations becoming more important, the Bank expects household expenditures to decelerate to a pace closer to the rate of income growth over the projection horizon. Overall, the composition of demand in Canada is expected to shift away from government and household expenditures towards business investment and net exports. The strength of net exports will be sensitive to currency movements, the expected recovery in productivity growth, and the prospects for external demand.
Inflation in Canada has been slightly below the Bank’s July projection. The recent moderation in core inflation is consistent with the persistence of significant excess supply and a deceleration in the growth of unit labour costs. The Bank judges that the output gap is slightly larger and that the economy will return to full capacity by the end of 2012 rather than the beginning of that year, as had been anticipated in July. The inflation outlook has been revised down and both total CPI and core inflation are now expected to converge to 2 per cent by the end of 2012, as excess supply in the economy is gradually absorbed and inflation expectations remain well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.
At this time of transition in the global recovery, with a weaker U.S. outlook, constraints beginning to moderate growth in emerging-market economies, and domestic considerations that are expected to slow consumption and housing activity in Canada, any further reduction in monetary policy stimulus would need to be carefully considered.
Information note:
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 20 October 2010. The next scheduled date for announcing the overnight rate target is 7 December 2010.

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Bank of Canada Maintains Overnight Rate Target at 1 Per Cent.

Consumers on the long end of the borrowing spectrum appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

 

By Garry Marr, Financial Post October 17, 2010

Rock-bottom long-term mortgage rates appear to have handed the housing sector the lifeline it desperately needs, helping to push up sales for a second consecutive month and keep prices from falling.
The Canadian Real Estate Association said Friday sales last month rose 3% from August on a seasonally adjusted annualized basis — highest since May 2010 — and the second straight month sales rose.
Meanwhile, prices have also begun to stabilize as fears of a dramatic meltdown appear to be abating. The average price of a home sold in Canada last month was $331,089, down slightly from the $331,683 average a year ago. But prices were up from a month earlier, when the average was $324,928.
“Supply and demand are rebalancing and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.


The other factor keeping the market afloat are interest rates.
The Bank of Canada has signalled it will take a pause on raising its key lending rate which should keep the prime rate at most banks at 3%, affecting any variable rate borrowers.
But it’s consumers on the long end of the borrowing spectrum who appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.
Gary Siegle, the Calgary-based regional manager for mortgage broker Invis Inc., said the standard rate for locking in for five years is now 3.69% but adds some lenders have dropped to as low as 3.39%.
“I’ve been working for 38 years and I don’t recall rates this low ever in my career,” said Mr. Siegle, adding the discount on variable-rate mortgages has dropped to the point that consumers can float with a rate as low as 2.35%.
“The question I wonder about is at these rates is why are people not all over the real estate market?”
CREA said two-thirds of local markets last month posted sales increases with Winnipeg, Calgary and Montreal standing out. However, compared with last year, sales still lag across the country, down 19.8% in September from a year ago.
“Record level sales activity late last year and earlier this year is expected to further stretch year-over-year comparisons in the months ahead,” the group warned.
TD Bank Financial Group economist Shahrzad Mobasher Fard expects falling mortgage rates to be a significant boost for the market for the near future. “They are a factor that cannot be dismissed,” said Ms. Mobasher Fard. “[Current rates] won’t lead to an overheating but it will support further growth in home sales and prices. The last two months of data indicate there has been a bottoming out of home-selling activity and prices.”
Demand is still tepid but there has been a slowdown in new listings, which are 15% off the peak reached in April. The number of months of inventory, which represents the number of months it would take to sell inventories at the current rate of sales activity, was down to 6.6 months in September.
It was the second straight month inventory levels dropped, having stood at 6.9 months in August and 7.2 months in July.
“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA.
“Interest rates are going nowhere fast, so home ownership will remain within reach for many home buyers.”
The chief executive for Royal LePage Real Estate Services Ltd. said he was almost a bit relieved to see the latest figures.
“I was pleasantly surprised to see the year-over-year average price flat given the strength of last year’s September results,” said Phil Soper. “I expected a small decline in average price. It has been driven almost entirely by the low cost of money.”
Financial Post
gmarr@nationalpost.com

http://www.okanaganmortgages.com/

Consumers on the long end of the borrowing spectrum appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

Home Buyer Protection Plan

Are you a buyer thinking about purchasing a property but worried because the media keeps reporting prices are going to drop further?  Do you know someone who is trying to sell their home but no one is looking at it?  Are you a Realtor frustrated because you have a large inventory of listings?  Then you NEED to hear about the Buyer Protection Plan.

The Buyer Protection Plan (BPP) is an innovative plan for buyers of real estate.  If the real estate market drops the following year after you have purchased, the buyer will be compensated for this decrease.  This innovative strategy was developed by 180 Degrees Solutions Inc. of Calgary.  Buyers are the first to retreat whenever there is a rumor of price drops.  Through this pioneering approach, the buyer’s equity in the new purchase is protected for the first twelve months. 

What if the seller was able to provide protection to the buyer through their Realtor?  What if the seller could say at this time next year he was willing to offer the purchaser of his house some insurance in the event real estate prices went down?  With mortgage rates at an all time low, why wouldn’t you jump into the market if you found the ideal home in the neighborhood you love, knowing that if you buy today and the market falls you will get a refund 12 months from now from the seller.

Fear of rates increasing in 5 years, could also cause some buyers to hesitate.  We also have a plan to assist buyers with this dilemma - The Inflationary Hedge Mortgage Strategy.  The IHS helps buyers eliminate any potential payment shock at maturity.

So if you are a buyer, what is keeping you from buying your dream home today?  If you are a Realtor, you need to Contact Laurie Baird and Scott Mason today at (250)862-1806, Certified Agents for the Home Buyer Protection Plan.

 

http://www.okanaganmortgages.com/

 

Home Buyer Protection Plan

RBC Report Says Bank of Canada Likely to hold Rates Until March 2011

RBC report says BoC likely to hold rates until March 2011

This month's RBC Financial Markets Monthly publication reports that the Bank of Canada is likely to hold rates until March 2010.
Report Excerpts:
Canada takes a breather after sprinting out of recession
With real GDP standing a hair’s breadth away from its pre-recession peak and final domestic demand already treading into new territory, reports of more moderate activity in July did not prove too surprising. The sharp recovery in the housing market started to stall in mid-2010 because pent-up demand generated during the recession was satiated and buying—ahead of the mild tightening in mortgage rules and the implementation or increase in the HST in three provinces—was exhausted. The robust sales pace left a high level of household debt in its wake resulting in the debt-to-income ratio rising to an all-time high in the first quarter.
Recent growth has not been strong enough to exert significant downward pressure on the unemployment rate and inflation pressures have been moderate with the core rate at 1.6%. The headline inflation rate was 1.7% in August, thereby holding below the Bank’s 2% target, even after the harmonization of provincial and federal sales taxes in Ontario and BC were incorporated into the price measure. Unlike in the US, where we expect that core inflation will remain very low, we forecast Canada’s core rate to hold just below the 2% target during the forecast horizon and gravitate above 2% in mid-2012.
Rate increases likely to resume in early 2011
Our overall assessment of the Canadian outlook has changed little in the past month, so we are maintaining our call that the Bank will gradually raise the overnight rate to 2.25% in the second half of 2011. This gradual reduction in policy accommodation will keep a lid on the degree that term interest rates will rise especially against a backdrop of very low U.S. rates. We trimmed our 2011 forecast for yields looking for the two-year rate to end 2011 at 2.85% and the 10-year bond yield at 3.75%.

Other highlights from this month's Financial Markets Monthly:

• U.S. data have been a mixed bag and confirm that the U.S. recovery is continuing, albeit slowly. The risk of deflation, not inflation, appears to be at the top of the mind for policymakers now with the Fed likely to implement another round of quantitative easing to ensure that growth and inflation do not slow further.
• The uncertain global outlook is likely to be the dominant factor in the Bank of Canada shifting to the sidelines for the remainder of 2010.
• Policymakers in the UK are unlikely to deliver a further easing in policy unless conditions become much worse.
• The RBA stayed on the sidelines this month although the statement showed a clear tightening bias which sets up for a hike before year end.
• Canada’s economy sputtered in July after very robust domestic demand earlier in the year.
• Inflation remains mild with both the headline and core rates below the Bank’s 2% target.
• The uncertain global outlook is likely to be the dominant factor in the Bank shifting to the sidelines for the remainder of 2010.

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RBC Report Says Bank of Canada Likely to hold Rates Until March 2011

Eight Ways to Save Money

Many Canadian families are working hard to save money and reduce debt. By saving modest amounts, however, you can reap big rewards over time. Here are easy ways you can save $100 or more this year.

1. Plug into Bargain Electricity

Are your electricity bills excessive? Maybe you're using too much power at peak hours. For instance, try running your dishwasher at night, rather than during the day. By taking advantage of off-peak rates, most consumers can save about $100 a year. Replace pre-1992 appliances when they break down with the news ones with the Energy Star label.

2. Challenge Your Property Tax

Go to your local assessor's office and find out what property taxes your neighbours are paying. If your house is similar but your taxes are higher, you may want to challenge your bill. Also, read the description of your home. Errors in square footage or the number of bathrooms could mean an overcharge. The assessor's office or local board of tax review can tell you how to file an appeal.

3. Pay Off Your Plastic

If you carry a credit-card balance from month to month, pay it back pronto. A $1000 balance at 18 percent blows nearly $200 a year in interest. If you can't pay it off in full, transfer your debt to a lower-rate card.

4. Say No to Car Extras

Your car dealer may sell you rustproof treatment and fabric protection at $100 a pop, and paint protection for as much as $250. Usually these extras are the dealer's way to squeeze more money out of you.

5. Skip the Service Contract

Extended warranties on electronics are rarely a good deal. Experts say most product breakdowns occur in the first year and are covered by the manufacturer's warranty.

6. Buy in Bulk

Items you may use a lot, such as paper towels and diapers, are often far cheaper when you buy in quantity. For example, new parents buy an average of 2400 disposable diapers in their baby's first year alone. Diapers that cost 20 cents a piece sold at grocery shops might go for 15 cents when bought in bulk at a discount store or warehouse. Just a nickel a diaper could add up to an annual savings of $120.

7. Rethink Your Vacations

The "staycation" (relaxing at home) is becoming a popular way to save a bundle on a vacation. But if you still want to travel, consider using a "homestay" program.

8. Use Online Banking

Online Banking can save you time and money. If you sometimes forget to pay bills, set up automatic payments in order to avoid potential late fees. It also allows you to monitor your cash flow more easily.


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Eight Ways to Save Money

Low Mortgage Rates Boost August Home Sales

Vancouver, BC – September 14, 2010. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province declined 35 per cent to 5,590 units in August compared to the same month last year. On a seasonally adjusted basis, MLS® residential unit sales in the province increased 7 per cent in August from July 2010. The average MLS®

residential price climbed 4 per cent to $487,804 in August compared to the same month last year.

“August home sales posted the first month-to- month increase since March of this year,” said Cameron Muir, BCREA Chief Economist. “Lower mortgage interest rates and an improving labour market are inducing additional consumer demand.”

“The number of new residential listings in the province has fallen 30 per cent since April,” added Muir. “With fewer new listings, total active listings are now on the decline, signaling that an end to the buyer’s market may be on the horizon.”

Year-to-date, BC residential sales dollar volume increased 8 per cent to $26.9 billion, compared to the same period last year. Residential unit sales rose 2 per cent to 53,717 year-to-date, while the average MLS® residential price climbed 10 per cent to $501,226 over the same period.

http://www.okanaganmortgages.com/

Low Mortgage Rates Boost August Home Sales

Bank of Canada Increases Overnight Rate Target to 1 Per Cent.

FOR IMMEDIATE RELEASE
8 September 2010 CONTACT: Jeremy Harrison
613 782-8782
Bank of Canada increases overnight rate target to 1 per cent

OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank's expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

Information note:
The next scheduled date for announcing the overnight rate target is 19 October 2010. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 20 October 2010.

http://www.okanaganmortgages.com/

Bank of Canada Increases Overnight Rate Target to 1 Per Cent.

Choosing a Contractor

Choosing a contractor

Renovating a home requires an endless process of decisions. And the first one-choosing who will do the work-is often the most daunting

By Ruth Myles, Calgary Herald



When undertaking a renovation, ask family, friends, co-workers and neighbours for recommendations. And don’t be afraid to knock on a stranger’s door if you know they've had a new kitchen put in. Most people are only too happy to share their experiences.

When undertaking a renovation, ask family, friends, co-workers and neighbours for recommendations. And don’t be afraid to knock on a stranger’s door if you know they've had a new kitchen put in. Most people are only too happy to share their experiences.
Photograph by: Photos.com, Calgary Herald

The most well-known adage in real estate is "Location, location, location." The second-most famous, which applies to renovation, also features a trio: "If you’re going to have work done, get three estimates." Easier said than done. What exactly should be in those estimates? Is there a fee involved? Should floor plans and finishes be nailed down before approaching these fabled three companies? Often, the sheer scope of what’s involved can overwhelm homeowners interested in a reno, relegating the dream project to the back burner for yet another year. But take a deep breath—even better, take three—and we’ll take that first step together.

Ask family, friends, co-workers and neighbours for recommendations. (Basically, everyone you know.) And don’t be afraid to knock on a stranger’s door if you know that a house down the street had a new kitchen put in. Most people are only too happy to share their experiences. Check out local publications for renovation features and profiles of award-winning companies.

Once you’ve compiled a list of contenders, start calling around. Have footage, features and finances on hand. Many companies employ a multistage approach to estimates. The process starts off with a ballpark figure, then moves into more detailed accounting the further into the process you get. "From ballpark to budget to final, we’re going to be plus or minus 10 per cent. If 10 per cent is going to make or break the project, then we shouldn’t be in the running to begin with," says Steve Perlette, project manager at Litwiller Renovations and Custom Homes. (Hence, the wisdom of budgeting an extra 10 to 15 per cent of the total cost of the renovation. There’s nothing like scrambling to come up with an extra 15K.)

Ultimate Renovations also begins with an educated estimate; then, if both parties agree, they draw up a plan and create a spec document that details anything and everything in the job, from framing to the number of electrical outlets to the kitchen sink and its faucet. "Pay for a proper drawing and then, if you want, go shopping," says Danny Ritchie, president of Ultimate Renovations. "This way, you’re comparing the same apples to the same apples."

His company charges two per cent of the job cost for these plans, but that fee is waived if Ultimate gets the job.

In addition to checking references, Ritchie recommends that potential renovates request a visit to the business’s office, as well as current job sites, to get a real feel for the kind of work they do. "Sure, they may have been in business for 40 years, but under 40 different names." And, as different companies have different levels of spec, it’s important to ask what their level of finish is. "You can do very inexpensive casings, carpet at two bucks a square foot, stuff like that, so there can be a fairly substantial spread in specifications," Perlette adds. Once homeowners have a range of quotes from three companies in hand, Perlette recommends choosing between the ones that are consistent in pricing, throwing out the high and the low. "You’ll usually have two or three that are fairly realistic and have valuable numbers in them."

Of course, people need to look at more than just dollars and cents when it comes to choosing a renovator. The potential to establish a real connection should be the final deal-maker. (That has certainly proved true for me. Five people have keys to our home and the only one not related by blood is John, our handyman since we bought the house in 2006.) "Pick the people that you like, that you enjoy talking with, that you think you can communicate with because it’s a long process," Perlette says. "It’s very invasive. You have to live with these people for a very long time."

Calgary Herald

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Choosing a Contractor

Five Tips For Smart Back to School Shopping

Start your back-to-school shopping with a game plan. Even if your child’s
teacher hasn’t provided a list of school supplies, you can’t go wrong by
sticking with the basics and taking advantage of back-to-school sales. Here’s
how:

Make a list and get your child involved.

Use the recommended or required supplies from your child’s school or
teacher as a starting point. If you don’t have a list yet, check with parents at
your school who have older kids. They might have good advice about what is
required in your child’s grade. Sit down with your child and go over your list
together. You’ll be teaching your child how to get organized, a skill that
applies to more than shopping.

Separate wants from needs.

Most school supplies don’t go out of style, and your child will happily use the
unsharpened pencils his older sister didn’t use. But as any parent with last
year’s superhero notebook knows, beware the power of trends. Rather than
getting into an argument with your older child about whether a backpack
with headphones is essential because “everybody is getting one,” try setting
a budget for supplies. It will help your child set priorities, learn how to
manage money, and start saving his allowance for the items your budget
won’t allow.

Take inventory.

Sort through last year’s supplies to see what is left over or can be reused.
(Having trouble finding last year’s stuff? Resolve to set up a place to keep
your school supplies together this year.)

Start early and look for bargains throughout the summer.

The best bargains are often available at back-to-school sales. Keeping your
supply list in your car or purse or on your PDA will help you shop for supplies
as you do your other errands.

Buy basics in bulk.

You know you’ll need paper, pencils, glue stick and notebooks. Dollar stores,
warehouse stores and even eBay sources for buying these and other basics
in bulk. You and a group of other parents might be able to negotiate a group
discount from an office supply store.
Then set up a supply shelf or storage container in your home that you can
use all year long. You’ll be able to avoid late-night shopping trips to buy
notebook paper when you run out. And you’ll know where to find unused
notebooks and pencils when it comes time to shop for back-to-school
supplies next year

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Five Tips For Smart Back to School Shopping

"North America's Story is Again Darkening", Says CIBC

TORONTO, Aug. 18 /CNW/ - Continuing weakness in the U.S. economy may force the Bank of Canada to put interest rate hikes on hold after September, notes a new report from CIBC World Markets Inc.

"North America's story is again darkening," says CIBC's Chief economist in the latest Global Positioning Strategy report. "We were looking for a material second-half slowdown for the U.S. but as it turns out, it's already happened."

Economic growth stateside from April to June is being revised downward, Mr. Shenfeld notes, and key indicators are pointing to growth that will be slower than anticipated by U.S. monetary policy makers.

And still ahead is a "further fiscal belt tightening in 2011 that will have to be softened, and accompanied by quantitative easing, if the U.S. is to stay out of recession in early 2011 and get back to potential growth by the end of that year.

"Forget about any rates hikes from the U.S. Federal Reserve until sometime in 2012 at the earliest."

While Canada is in much better economic shape - it leads the U.S., Eurozone, U.K. and Japan in first-half growth and has a record gap over the U.S. in the share of working age population holding a job - it "cannot move all the way to normalized interest rates while the U.S. Federal Reserve is still on hold," Mr. Shenfeld contends.

For starters, an interest rate differential of 300-400 basis points would take the loonie "substantially stronger" creating additional headwinds for Canadian economic growth, says Mr. Shenfeld.

Furthermore, the "external environment will be one of less-than-normal growth as fiscal tightening bites in Europe and the U.S., and with our own upcoming fiscal tightening also hitting domestic demand, monetary policy might have to be set at stimulative levels to allow the economy to return to potential and remain there. To keep moving at all, you have to step on the gas if your car is trying to roll up a steep incline."

Mr. Shenfeld doubts that the Bank of Canada "has been shocked enough to forestall a rate hike in September" but his forecast that Canadian growth in Q2 and Q3 will fall below the BoC's outlook will likely warrant a rethinking in the October Monetary Policy Report and in the months to follow.

The report also notes that there are limits to how far the Bank of Canada can diverge from the U.S. Federal Reserve without later regretting it. Episodes in recent years in which rate overnight rates were 2 per cent or more above those stateside resulted in sagging or sacrificed growth. These are "lessons learned, we hope," says Mr. Shenfeld.

"Since a hike at every rate setting date through 2011 would take rates substantially higher than 2%, a pause is coming on the road to tightening."

As a result of the dampened external growth outlook, Mr. Shenfeld has trimmed his call for rate hikes. He sees Canadian overnight rates going no higher than 2% next year as the U.S. Federal Reserve stays on hold.

A less hawkish monetary policy combined with a mixed outlook for commodity prices affected by slow global growth will also likely see the Canadian dollar roughly two cents weaker than earlier forecast over the same horizon, adds Mr. Shenfeld.

The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_aug10.pdf



CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.

http://www.okanaganmortgages.com/

"North America's Story is Again Darkening", Says CIBC

Mortgage Payment Difficulties

When unforeseen financial circumstances impact your ability to make regular
mortgage payments, it's important for you to take quick action. With early
intervention, cooperation, and a well executed plan, you can work together
with your mortgage professional to find a solution to your financial
difficulties.

What Can I Do to Help?

If you find yourself facing financial difficulties, as a result of job
loss, family income reductions, or for other reasons, it can be an overwhelming experience leaving you feeling uncomfortable and unsure of what to do. By following these three simple steps, you can make a big difference in resolving your financial difficulties.

1. Talk to your mortgage professional

To increase the chance of successfully managing your financial situation
through early intervention, call your mortgage professional at the first
sign of financial difficulty ask the mortgage professional about information on the options available for managing your financial situation and keep the mortgage professional informed as circumstances evolve.

2. Clarify the financial picture

To help your mortgage professional fully understand your financial
situation, before meeting with them, prepare a detailed list of financial obligations including any credit cards, loans, household bills with the amounts owing and their due dates. Be sure to include information about your current income, savings accounts, investments, and any other assets.

3. Stay informed

The more information you have at your disposal on managing your finances,
the easier it will be to make the right decisions. Take Charge of Your Debts is an online tool from the Government of Canada that is designed to help borrowers like you understand debt problems, and includes information on making a budget, budget counselling, credit repair, etc. Log onto (www.igc.ca) (Industry Canada) and search for "Take Charge of Your Debts".

How Can Mortgage Professionals Help?

Your mortgage professional wants to establish and maintain a positive
relationship with you over long term, and is fully trained and equipped with
the tools to help you deal with the temporary financial setbacks you may be
facing.

http://www.okanaganmortgages.com

Mortgage Payment Difficulties

Take Time to Enjoy the Summer

A Mayonnaise Jar and Two Beers…

When things in your life seem almost too much to handle, when 24 hours in a day are not enough, remember the mayonnaise jar and the 2 beers.

A professor stood before his philosophy class and had some items in front of him. When the class began, he wordlessly picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was.

The professor then picked up a box of pebbles and poured them into the jar He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was.

The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous 'yes.'

The professor then produced two beers from under the table and poured the entire contents into the jar effectively filling the empty space between the sand. The students laughed.

'Now,' said the professor as the laughter subsided, 'I want you to recognize that this jar represents your life. The golf balls are the important things---your family, your children, your health, your friends and your favorite passions---and if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, your house and your car.

The sand is everything else---the small stuff. 'If you put the sand into the jar first,' he continued, 'there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.

'Pay attention to the things that are critical to your happiness. Spend time with your children. Spend time with your parents. Visit with grandparents. Take time to get medical checkups. Take your spouse out to dinner. Play another 18. There will always be time to clean the house and fix the disposal. Take care of the golf balls first---the things that really matter. Set your priorities. The rest is just sand.'

Take Time to Enjoy the Summer

Variable Rate May No Longer Win

Garry Marr, Financial Post · Tuesday, Jul. 27, 2010

Not that there are a lot of people buying houses these days, but the answer to the age-old question of whether to go long or short on your mortgage is unclear yet again.

The Bank of Canada’s second quarter-of-a-point rate increase in the past two months is likely not going to do much to boost a real estate market that saw sales drop almost 20% across the country in June from a year ago.

The popular variable-rate product tied to prime that helped people buy a lot more house with more debt is going up too. The prime rate at the major banks, which tracks the Bank of Canada’s rate, is now at 2.75%.

But a funny thing happened as the Bank of Canada was raising rates. With much of the credit crisis seemingly behind us, the discounts on short-term borrowing are increasing as the cost of funds for banks also fall. Instead of borrowing at 100 basis points above prime, it’s now 70 basis points off prime.

At 2.05%, a variable-rate product today may look as attractive as ever, but the five-year fixed-rate closed mortgage is falling fast. It can now be had for a shade under 4%, says Rob McLister, editor of Canadian Mortgage Trends.

“Bond yields have fallen out of bed and nobody expected that,” said Mr. McLister, adding the spread between the five-year Government of Canada bonds and five-year mortgages is still large enough that the banks may reduce long-term rates even more. However, at about 4%, the five-year closed fixed-rate mortgage isn’t far off its record low.

Bank of Montreal senior economist Sal Guatieri does agree that variable-rate products have worked out better than fixed-rate mortgages throughout history, but says the tide may be turning.

“Given that the central bank has already raised rates a couple of times now and will likely continue to raise rates, it probably is a correct assumption to make,” says Mr. Guatieri, noting variable usually works in a declining interest-rate environment. “The next five years might not quite follow the past. You could probably argue it’s wiser to lock in now. It’s a close call.”

Bank of Montreal is forecasting another 25 basis point move in September and says rates will climb another 1.5 percentage points by the end of 2011. If Mr. Guatieri and others are right, by 2012, the variable-rate products out today would clock in at just above 3.75%, if the discounting remains the same.

“If you are still in that variable-rate product then, you’d have to sweat out the next three years because there would still be possibly more increases,” says Mr. Guatieri, who adds his bank sees the overnight rate eventually going to 4% in the following three years. Based on the present gap between the Bank of Canada and prime, that would place the variable-rate product you get today at 6% by around 2015.

Fears of such a scenario are driving people into fixed-rate products again. That, plus new mortgage rules that make it easier to qualify for a mortgage if you go for a fixed-rate product with a term of five years or longer.

“The Bank of Canada is doing what it said — it’s going ahead with rate increases. If I was counselling someone, the prediction is rates are going up, so now is a good time to consider locking in for a term,” says Don Lawby, president of Century 21 Canada.

It makes sense, but with variable rate still at around 2%, it’s easy to see why people wouldn’t want to lock in. Even Mr. Guatieri says if you are secure in your financial situation and don’t need to fix your mortgage payments, “you might just want to let it ride.”

There just never seems to be a clear answer on whether to lock in or stay variable.

Read more: http://www.financialpost.com/news/Variable+rate+longer/3329442/story.html#ixzz0vSziPq1z

Variable Rate May No Longer Win

Second Mortgage Loans vs Home Equity Loans

It’s not surprising that some homeowners confuse the terms “second mortgage”
and “home equity loan.” After all, a second mortgage is a type of home equity
loan. But more often than not, home equity loan is used to describe a home equity
line of credit, or HELOC. If you want to take advantage of the equity that you have
built up in your home, you will need to decide if a HELOC or a true second
mortgage is best for you.
Before discussing which might be better for your purposes, let’s look at some of
the basics of each. A second mortgage pays out a fixed sum of money to be repaid
on a set schedule, like your initial mortgage. Unlike refinancing, the second
mortgage does not supersede the first mortgage. Second mortgages are usually 15
to 30 year loans with a fixed rate of interest. Like the initial loan, the rate of
interest and points (if any) will be based on your credit history, the price of the
home, and the current interest rate. While the interest rate on a second mortgage
may be a little higher, the fees are generally lower.
HELOC, however, is similar to a credit card, and it may even include a credit card
to make purchases. Like credit cards, interest is charged, and the amount you can
borrow is based on your credit worthiness.
To determine the limit of your HELOC, lenders will look at the appraised value of
your home, you may have access to up to 80% of the appraised value or purchase
price of your home (whichever is lower), less any prior outstanding mortgage
charges. As your mortgage balance decreases, your available rate increases.
Your current financial needs will help to determine which type of loan is right for
you. If you need money for a one-time expense, such as building a new deck or
paying for a wedding, you would probably opt for the fixed-rate second mortgage.
But if you forecast a recurring need for extra money, such as tuition payments,
you may prefer a HELOC. A line of credit allows you to borrow when you need the
money and, if you pay back the amounts quickly, you can save money over a
second mortgage. You also need to consider your spending habits. If having
another credit card in your wallet would temp you to spend more often, then you
are not a good candidate for a HELOC.
Once you make an initial determination about which loan might be right for you,
you will need to discuss the details with a professional. We recommend that you
speak with an independent mortgage broker with experience in this sector to help
you make the most effective decision among the products available.
Why work with an independent broker?
- Because they are not loyal to any one financial institution (i.e. like a bank
consultant), the options presented will be greater.
- Independent mortgage brokers scour the market for the best mortgage
products – not just those being pushed by a particular company. As the
mortgage broker fee is paid by the lending institution, it’s a decision that
doesn’t cost you anything.
(Source: AllBusiness.com)
S

Second Mortgage Loans vs Home Equity Loans

How the Impact of the HST Will Differ Between Ontario and B.C.

By Keith Leslie

TORONTO — The harmonized sales tax about to take effect in British Columbia and Ontario is proof of Benjamin Franklin’s assertion that “in this world nothing can be said to be certain, except death and taxes.”

Funerals are just one of many services and goods previously exempted from provincial sales taxes that will be subject to the HST starting Canada Day, as governments in both provinces switch the tax burden from corporations and to consumers.

However, exactly what’s going up in price and what’s not depends entirely on which province you live in.

The single sales tax, which combines the five per cent Goods and Services Tax with provincial Retail Sales Taxes, will be 12 per cent in B.C. and 13 per cent in Ontario.

Energy costs will be the biggie for most Ontario consumers, with an immediate jump in the cost of electricity, natural gas and home heating oil because of the HST.

Ontario motorists will be among the first to feel the pinch when they fill up at the pumps. Gasoline and diesel fuel, which had been exempt from the province’s eight per cent sales tax, will be subjected to the 13 per cent HST.

British Columbia is maintaining its exemption for the provincial sales tax portion of the HST on gas and diesel, and won’t apply the HST to electricity or home heating fuels. However, B.C. has a carbon tax on energy that will rise to 4.82 cents a litre on July 1.

The tax on alcohol is actually decreasing, but the prices won’t. The provincial taxes of 10 to 12 per cent will be lowered under the HST, but other fees and taxes will rise because of what the provinces say is their social responsibility to maintain minimum prices for liquor.

The HST will not apply to purchases of resale homes in either province, but will apply to new homes costing over $400,000 in Ontario and those over $525,000 in B.C. New home buyers in Ontario will receive rebates up to $24,000 to lessen the impact of the HST.

There are so many other differences to the way B.C. and Ontario are harmonizing sales taxes that retailers who operate in both provinces will need two rule sheets to figure out what’s taxed and what’s not.

Internet fees will now be subject to the HST in Ontario, but were already hit with both taxes in B.C.

British Columbia will apply the HST to cable television fees and local residential phones, both of which were already taxed with the GST and PST in Ontario.

Green fees at golf courses will be subjected to the HST in Ontario but not in British Columbia.

Ontario has exempted newspapers and prepared meals and drinks costing under $4 from the HST, but British Columbia did not.

B.C. will apply the HST to snack foods, catering services, over-the-counter medications and food-producing plants and trees.

Ontario will apply the HST to legal services but they will remain exempt in B.C.

B.C. will subject shoe repairs, tailoring, wedding planning services and veterinary bills to the HST while those services remain exempt in Ontario.

Taxes will go up in both provinces on services such as lawn care, snow removal, dry cleaning, hair cuts, massages, personal trainers, gym memberships and home service calls. Home renovations and real estate commissions will also rise because of the HST.

Home insurance was exempt from the GST so it will not be hit with the HST, but will still be subject to the provincial sales tax.

Other items previously exempt from the PST but now subject to the HST include hotel rooms, taxis, domestic air, rail and bus travel along with campsites and hunting and fishing licences.

Also rising will be the tax on magazine subscriptions, some theatre tickets, ski lift fees, rental fees for hockey rinks and banquet halls and lessons for everything from ballet to soccer. However, music lessons will remain exempt from the HST.

Music and videos downloaded as MP3 files will also be subject to the HST after previously being exempt from the provincial sales tax.

Cigarettes and other tobacco products — and nicotine replacement products — will also be subjected to the HST after being exempt from the provincial sales tax, as will vitamins.

There will be no HST on vital documents such as health cards and birth certificates or on driver’s licence and vehicle plate renewals, although personalized vanity plates will be subject to the HST in Ontario.

Used cars, which were previously exempt from the five per cent GST when sold privately, will now be subject to the 13 per cent HST in Ontario and a 12 per cent provincial sales tax in B.C.

Both provinces negotiated some exemptions from the HST with the federal government, which wanted the tax applied as widely and with as few exemptions as the GST.

Consumers will continue to pay only the five per cent GST on children’s clothing and footwear, children’s car and booster seats, diapers, books and feminine hygiene products.

The HST will not be charged on basic groceries, rent, condo fees, prescription drugs, some medical devices, child care, municipal public transit, most health and education services, tutoring, most financial services and legal aid.

However, even though condo fees are exempt from the HST, purchases by condominium corporations will be subject to the tax, so condo fees are expected to rise.

The price of going to the movies or a sporting event in Ontario is actually expected to drop with the introduction of the 13 per cent HST because those outings were hit with a 10 per cent PST plus the GST.

The Canadian Press http://news.therecord.com/Business/article/737079

How the Impact of the HST Will Differ Between Ontario and B.C.

Risk & reality

Helen Morris, National Post · Saturday, Jun. 26, 2010

There is a lot to consider when deciding whether to go for a fixed or variable rate mortgage -- not least, your tolerance of risk and your ability to sleep at night. Generally, fixed rate mortgages charge a higher rate and cost more, but payments are fixed for the term of the mortgage so you know what amount is coming off your principal. Variable rate deals, on the other hand, have generally cost less over the term of a mortgage but payments rise -- and fall -- with rate changes, so while your payment stays the same, the amount that goes toward the principle could vary.

In recent years, a number of lenders have begun offering mortgages that feature a fixed and variable combination.

"You would have multiple mortgage segments attached to the same home," says Marcia Moffat, head, Home Equity Financing, RBC Royal Bank. You could set up a mortgage where, for example, you have "half your mortgage as a five-year fixed rate, a quarter of your mortgage as a two-year fixed rate, and you could take a variable rate mortgage for the other part."

A number of brokers have seen increased interest in these umbrella products.

"Combination or hybrid mortgages are growing in demand," says Rosa Bovino, a mortgage broker with Invis, "... mostly because people are unsure where the market is going. For those who are not comfortable locking in the full amount and want to play with the prime rate, there are some great variable rates out there where you're ... paying 1.9%, which is phenomenal."

As well as being exposed to different interest rates, the amortization period for each segment can also be different.

"If you think of the other side of your balance sheet, with your investments, you would typicallydiversify-- you wouldn't take a single approach to all your assets," says Ms. Moffat. "This is applying the same mindset to the credit side of the balance sheet."

The hybrid mortgage has one other hidden asset, Ms. Bovino says. It can help households in which the mortgage holders have different risk tolerances.

"You do get couples, one is more conservative [and] the other one wants to gamble," says Ms. Bovino. "That's where you see a larger percentage of the clients taking on [hybrid mortgages]."

As with all mortgages, it pays to ask questions and read the fine print.

"There are a lot of nuances with those mortgages, and you have to be very careful with the lender you choose and the different ... options and terms," says Kim Gibbons, a broker with Mortgage Intelligence in Toronto. "I disclose up front what the risks are for those mortgages and when I do...for the most part, (clients) usually choose to go either fixed or variable. I am able to provide them with a better rate on either fixed or variable as opposed to the hybrid."

Whether or not you pay a rate premium for a hybrid mortgage may depend on how it is structured.

"If they're working with a mortgage broker, they're going to get the wholesale rate so there is no upping any interest rate because you're splitting your mortgage," says Ms. Bovino. "Overall, by doing the combination mortgage you will probably pay less over the life of a mortgage ... if a component of it is at the lower variable rate."

Advisors also suggest thinking ahead to renewal time.

"When the mortgage comes up for renewal, there may be two portions of it that are up for renewal at different times," says Ms. Gibbons. "This makes it very difficult to break the mortgage ... you would have to pay penalties on the part that is not matured."

While you cannot readily switch lenders mid-way through a hybrid mortgage, "the nice thing about them coming up at different times is that you're not 100% exposed to any one particular rate environment. This is a way to hedge your bets," says Ms. Moffat. "With a five-year and a two-year, you'll be exposed to whatever the environment is in two years and the other in five years. It's a bit of a laddering approach."
Read more: http://www.nationalpost.com/Risk+reality/3203814/story.html#ixzz0s9CnDjOv

Carney Says Don't Take Rate Hike For Granted.

By Ka Yan Ng

CHARLOTTETOWN Prince Edward Island (Reuters) - Bank of Canada Governor Mark Carney cautioned investors on Wednesday not to take another interest rate hike for granted, saying volatile global conditions meant no particular path for monetary policy was preordained.

The central bank raised its key rate by a quarter point on June 1 to 0.5 percent, becoming the first in the Group of Seven wealthy countries to do so, and markets are pricing in a second rate hike on July 20.

"The bank must balance the competing influences on Canadian activity and inflation of momentum in domestic demand and the increasingly uneven global recovery," Carney said in a speech in Charlottetown, Prince Edward Island.

"In light of the scale and volatility of these conflicting forces, it should be evident that no particular path for monetary policy is preordained."

Carney said the bank will need to be agile and take a subtle approach to monetary policy.

The central bank's next rate announcement is on July 20.

Yields on near-term overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, showed markets see an 83.08 percent chance the bank will tighten rates further in July. This was down from 83.49 percent just before Carney's speech.

The Canadian dollar rose to its highest level since May 14 just after Carney's speech was released. It climbed to C$1.0224 to the U.S. dollar, or 97.81 U.S. cents, then pared gains to sit almost unchanged from Tuesday's close at C$1.0251, or 97.55 U.S. cents.

Canada's economy has recovered faster than predicted, fueled largely by consumer spending, and the bank expects it to be the fastest-growing G7 country over the next two years.

A cornerstone of the Canadian economic recovery had been a sturdy residential housing sector, but statistics earlier in the day showed the sector was cooling further. Sales of existing homes in Canada fell 9.5 percent in May from April, data showed.

Carney noted that the central bank's most recent forecast projected housing market activity would slow "markedly" for the balance of the year and that the latest resale numbers are consistent with that.

He also reiterated that growth would be handed off to the private sector as government stimulus winds down.

One of the key risks to the economic outlook lies externally as the Greek debt crisis and increasingly multi-speed global recovery could have spillover effects in Canada, Carney said.

"Canada is not an island ... The biggest risks we face are from abroad. Those are the biggest swings," he told reporters following his luncheon speech.

CARNEY TO G20: BE BOLD

To prevent the global recovery from derailing or creating crippling imbalances, Carney urged the G20 group of developing and advanced economies to commit to bold policy changes at their summit in Toronto this month.

"The fiscal challenges that face a number of advanced economies are addressable, but they are addressable with bold action and that was part of the point of the speech. That is very much part of the point of one of the core objectives for Canada at the G20 summit," Carney said.

The required changes include more flexible currencies and reforms to boost domestic demand in emerging economies like China, as well as reducing deficits and enhanced productivity and growth potential in advanced nations.

They must also follow through with their G20 pledge to reform the financial sector to avoid future meltdowns and to resist trade and financial protectionism, he said.

"These are all big decisions. How quickly and how effectively they are taken will influence activity and inflation in Canada and, therefore, the stance of monetary policy," he said.

Carney Says Don't Take Rate Hike For Granted.

Maybe Your Mortgage Needs a Check-up.

Andy Holloway, Financial Post ·

While about 80% of Canadians visit a doctor at least once a year to help ensure they remain physically healthy, the number of people who check their financial health by regularly reviewing their mortgage is far less.

Plenty can change in someone’s life in a year, never mind during the standard five-year mortgage a lot of Canadians sign up for. A career change, kids, retirement or new found money or it could be that such a major event is on the horizon. All can affect the type of mortgage that fits just right.

“A lot of people don’t like to face up to it but, doing an annual financial check-up is a very smart thing to do,” says Peter Aceto, CEO and president of Toronto-based ING Direct Canada. “Managing your financial lifestyle is just as important as managing your diet and exercise.”

Aceto says people often just wait for a renewal letter before they look at their mortgage, and even then they’ll likely send the contract back without considering if it is meeting their current needs because they feel changing providers or the terms is futile. But they should put just as much thought into a renewal or a review as they did when they signed the initial deal.

Kelvin Mangaroo, founder of RateSupermarket.ca, which compares mortgage rates and brokers across the country, agrees. “Canadian consumers tend to become complacent about their mortgage payments and they could be saving a lot of money.” He says home owners should annually review three main things: their current and expected future risk profile and net income as well as rates.

For example, the more adverse you become to risk, the less likely a variable mortgage will be right for you. Aside from comparing rates, Ratesupermarket.ca has a few other online tools that can help consumers figure if a change is a good thing, such as a mortgage calculator and a mortgage penalty calculator that will show how much you can expect to pay to break your existing mortgage. You can also sign up for e-mail alerts that tell you when rates change.

Rates are an obvious thing to pay attention to. If they’re going up, make sure you can make the higher monthly payment that may come at renewal time, or lock into a fixed rate if you’re on a variable. If rates are dropping below your existing rate, you might want to refinance or renew early.

“You’re making a commitment to be mortgage free in 25 years so you should have a longer term view of what interest rates will look like over that period, says Aceto. “Make sure you’re comfortable with them and comfortable making those payments.”

Even though banks are in the business of getting as much interest from you as they can, many will allow people to pay a lump sum of the principal on the mortgage’s anniversary and increase their monthly payments. An extra $100 a month on a standard $200,000 mortgage could save almost $18,000 in interest and shorten the amortization period by about four years, according to Aceto.

Paying down your mortgage faster may seemingly put a crimp into your future finances if something happens and you need the money — unlike, say, putting it into a tax-free savings account or other low-risk liquid investment. But many financial institutions have a re-advance clause that allows you to retrieve some of the money spent accelerating mortgage payments, says Peter Veselinovich, vice-president of banking and mortgage operations at Winnipeg-based Investors Group.

Of course, it may become more difficult to get those funds back if there is a dramatic downward change in housing values and you haven’t built up enough equity. But that’s where understanding your entire financial situation, not just your mortgage, can help. “Most of us don’t like to think about debt, says Veselinovich. “It’s just something that somehow comes up and ends up as part of our personal balance sheet and we make payments.”

Even something simple such as making renovations could affect the type of mortgage desired. For example, topping up or refinancing an existing mortgage can pay for renovations, providing you’re comfortable with a blended interest rate. If you’re buying a new home, you may be able to port your current mortgage. Or maybe you just want to consolidate higher-interest unsecured debt into your mortgage. “Rolling that into your mortgage can significantly save on interest costs and that will help you get out of debt sooner,” says Feisal Panjwani, a Surrey, B.C.-based broker with Feisal & Associates under the Invis Inc. umbrella.

A mortgage can also help you become more tax efficient if you’re thinking of investing in a business, buying a rental property or putting some money into mutual funds or the stock market. That’s because the interest paid on money borrowed on a principal property can be written off against revenue from those investments.

But the biggest reason for making changes to your mortgage mid-stream may be because it could be a lot easier to do something before your situation changes. “Making changes to your mortgage before you go into a new venture or before you retire would allow you to qualify much easier rather than waiting for your mortgage to come up for renewal,” says Panjwani. Read more: http://www.financialpost.com/personal-finance/mortgage-centre/Maybe+your+mortgage+needs+check/3141368/story.html#ixzz0qpeNQxZh

Maybe Your Mortgage Needs a Check-up.

The New Face of Debt

Andrew Allentuck, Financial Post · Friday, Jun. 11, 2010

For James Kennedy, a federal civil servant before he retired, and his wife, Jane, who retired from the Calgary civil service, the golden years have become a series of tough compromises. Both 59, they live in Qualicum Beach, B.C., a five-minute walk from the Strait of Georgia on Vancouver Island. They enjoy the mild weather, long walks on the beach and their beautiful home.

Trouble is, a lack of employment income combined with debt stalk the good times they thought they would have after they left their careers.

Their jobs paid them a total of about $100,000 per year. Today, as a result of too much house and the repairs it entails — repainting, new floors, new electrical circuits, new kitchen counters, custom French doors and other elegances — they carry a debt of almost $70,000, nearly twice their retirement income of $37,000 a year.

If they pay off the debt, James and Jane would face a cash shortage. They could do it, but it would wipe out all of their RRSPs and other retirement assets built up over their working lives. A tough choice.

“We used to think that our house would go up enough in price to cover our debts,” Mr. Kennedy explains. “But I don’t think you can rely on that.”

Their situation could be resolved by selling the house, yet they fear that having paid too much in renovations, even downsizing might leave them house broke — with a nice abode and nothing else.

“As I approach the age of 60, I don’t want to carry so much debt. There has to be an end to the debt. I want my mind to be clear that when we get our Canada Pension Plan and Old Age Security, we will be able to keep those benefits. We don’t want to go into our sunset years paying off our debts.”

See The Kennedys are not alone. A flurry of recent studies show a significant increase of retirees in debt. First was Investors Group, which said 62% plan to carry debt such as a mortgage into their golden years. Then Royal Bank of Canada came out with its Ipsos Reid poll, which found four in 10 Canadians retired with some form of debt, and one in four began retirement with a mortgage on their primary residence.

“More and more, Canadians are carrying debt into retirement,” said Lee Anne Davies, head of retirement strategies at RBC.

Just this week, BMO Financial Group noted less than half of Canadians 55 and over have a post-retirement income strategy in place and only a third have considered that they might outlive their savings.

It’s a new and dangerous trend.

Unlike their parents and grandparents, who remembered the Great Depression and regarded debt as a first step toward ruin, today’s retirees, especially Baby Boomers born between 1947 and 1966, grew up comfortable with owing others. Indeed, for many who grew up in the expansionary years of the 1960s, it was a normal and expected to have a credit card, fund a university education with loans, graduate to readily available mortgages and then to handy lines of credit from accommodative banks.

“Retirees, especially Boomers, are less averse to debt than their parents were,” says Peter Drake, vice president for retirement and economic research with Fidelity in Toronto. The contrast with earlier generations is stark, Mr. Drake adds. “They lived through a sustained period of strong economic growth and have adopted the idea that they will be well-off.”

Boomers have always had a major influence on consumer trends, and now they are changing the face of retirement as well.

“Boomers don’t have the same sense of saving for bad days that their parents had,” explains Charles Mossman, a finance professor at the Asper School of Business at the University of Manitoba. “When they retire, former workers, especially those who don’t have defined-benefit pensions that provide a guaranteed and sometimes even an indexed cash flow, wind up with more debt service charges than they can afford.”

According to a special report by The Office of the Superintendent of Bankruptcy that was released in 2008, 15.3% of all individual bankruptcies in Canada in 2003 were of individuals 55 and over, up from 6.9% in 1993. “Those over 65 are less likely to be able to recover economically and socially from the bankruptcy,” noted the OSB.

The risk of senior bankruptcy grows with age. A study for the Canadian Institute of Actuaries released June 2007, shows that longevity risk — the chance of living to a very ripe old age — poses the problem of running out of personal savings.

Given Canadians’ extending life expectancy — currently 78 for males, 83 for females — a person retiring at age 55 has a 40% chance of running out of personal savings by age 85 and a 90% chance of being flat broke by age 95. It should be noted the data shows that women, who outlive men on average and tend to have lower lifetime incomes, have even greater reason to fear poverty caused by longevity.

Compounding the longevity problem is the trend, promoted by some financial services companies, to early retirement. Remember Freedom 55? But retiring at that age means giving up what may be one’s most financially productive years. Indeed, if the average retiree has paid down most of his or her debts, and delays retirement to age 62, he or she can live in reasonable financial security, says demographer David Foot, an economist on the faculty of the University of Toronto and author of the 1996 bestseller Boom, Bust & Echo.

It would be wrong to label all debt foolish and all debtors in peril of financial catastrophe, argues Tina DiVito, head of retirement solutions at BMO Financial Group. “There is bad debt and good debt. Bad debt may be what one borrowed for a transitory pleasure, such as a vacation, after which the borrower has to pay high interest rates and gets no tax breaks.

“Good debt bears moderate rates of interest and is payable in a reasonable time period, perhaps as a part of an investment that makes interest tax-deductible,” Ms. DiVito says.

For good debt, consider the case of 61-year-old Montreal retiree Ioanna Jakus, who has maintained a mid-six figure investment portfolio while living on an after-tax income of less than $2,000 per month.

A former bank employee, she has a $10,000 line of credit with her stock broker. “I use the line to buy stocks and bonds,” she says. “I can deduct the interest I pay from my taxable income. My investments have been successful and have more than paid the cost of credit. What’s more, rates of interest are so low that borrowing to invest just makes sense for me.”

Not only has Ms. Jakus made intelligent use of credit, she has done so expertly, selecting low-risk GICs, bonds and blue-chip stocks with strong dividends. “I have always been motivated by the knowledge that only I can control my destiny,” she explains. “My husband and I paid off the mortgage — that was when interest rates were near 20% — and we never borrowed again for spending.

“Of course, I can clear my investment debt in a moment by using cash in one of my accounts. My philosophy has always been not to take risks that I cannot afford, especially when it comes to borrowing money.

“Nobody can look after me as well as I can,” she adds.

That’s a lesson a lot of retirees have yet to learn.
Read more: http://www.financialpost.com/news/face+debt/3143925/story.html#ixzz0qpSbthjV

The New Face of Debt