Just weeks ago you could find variable-rate mortgages at prime – 0.80% (P-.80%) or better.
Consumers thought they were here to stay, but the tables turned… fast.
Economic troubles and lender profit motives have shrunken variable discounts beyond expectations. Banks are now commonly quoting prime rate with little discounting.
Once the last few holdout lenders with P-.50% disappear, discounted variables could move towards P-.25%… or worse. Some lenders even suggest that prime or prime plus could be the new normal.
Meanwhile, aggressive brokers are selling five-year fixed rates at 3.25% or less. That’s an unusually low 50 basis point premium to a variable. A spread that tight doesn’t come around often, and it makes you rethink all of the research suggesting variables are the way to go.
Click here for the full article from CanadianMortgageTrends.com.
For those tired of paying mortgage interest to a bank, there is a technique that allows you to use your retirement savings to help buy your home or even finance a cottage or investment property.
The technique is known as a self-directed mortgage and is not widely used. In fact, Rowena Chan, a Vice President with discount broker TD Waterhouse, says it’s one of the “least common” investments she deals with.
But for those who have a mortgage, are looking for a fixed income investment, and have more than $50,000 sitting in their RRSP, it’s an option they might consider.
Angel Ilnisky was paying the rent and living with roommates, so she carefully saved up enough money for a 5% down payment on a house with her partner, Michael Nicholson.
The 29-year-old respiratory therapist at the Alberta Children’s Hospital and her 31-year-old oilfield driller partner worked hard to save, but the pair of first-time homebuyers quickly realized there would be plenty of other costs involved with buying their new home.
There was $300 for a home inspection, $1,000 for the lawyer, and the hidden costs of home ownership began to mount.
“You know there are going to be things that come up,” Ilnisky says. Luckily, some hail damage to the roof was covered by the previous owner’s home insurance, so it was totally replaced when they bought it – one less cost to worry about. They also avoided $800 in moving costs by not hiring a company and doing it themselves by renting a U-Haul and getting some friends to pitch in.
The legendary financier T Boone Pickens called his memoir The First Billion is the Hardest. But for those of more modest means, the first thousand may be the most difficult to invest.
Most people with just a fistful of dollars have little experience or confidence when it comes to managing money. And while your bank won’t turn you away, you’re not likely to find a financial adviser who’s thrilled about taking on your four-figure portfolio.
But as student Vince Sweeney discovered, there are plenty of options for those who are just starting out. In 2009, Sweeney read about the introduction of Tax-Free Savings Accounts and thought they sounded like a good deal. The markets were still in the dumps after the meltdown of the previous fall, and he saw it as a buying opportunity.
“I did some research, and my first purchase was a dividend fund from my bank, which had a $500 minimum,” says Sweeney, who was just 19 at the time. “Then I just started contributing every month.”
After about two years with his bank adviser, Sweeney opened a self-directed account and started managing his own money. Now in his fourth year at the University of Waterloo in Ontario, where he’s studying math with the goal of becoming a teacher, Sweeney will graduate with a portfolio worth about $5,000. When he retires decades from now with a comfortable nest egg, he’ll be able to trace it all back to that first $500 contribution.
Recent university graduate Kylie Robertson, 23, can’t see the point of financial planning at this stage in her life.
With a five-figure student debt load, a new job and no dependents, she’s not sure what she would be planning for. “I think I’m too young for financial planning because I don’t have a whole lot of finances to plan,” she explains from Edmonton.
It’s a common dilemma among young adults who leave school with a big bill and want to see that tally disappear.
“I suppose it’s more accurate to say that I’m too broke to consider financial planning,” she says. “If I were the age I am now with less of a debt burden, then it’s something I would consider. But even so, I would have no idea where to start beyond some basic RRSP contributions.”
Thinking you’re too young or too broke to craft a financial plan are just a few myths about financial planning, says Tamara Smith, Vice President of marketing and consumer affairs for the Financial Planning Standards Council.
Click here for five financial planning myths from the Globe and Mail.
Improving the air quality of your home is not as difficult or complicated as you might think.
And if anyone in your home has allergies, it’s doubly important to ensure that your home is free of allergens and chemicals.
Click here for some tips on how to improve the air quality of your home from ComFree.