October’s Rate Announcement Details

General Trish Pigott 25 Oct

Bank of Canada Announcement

Yahoo!!  A second rate pause in a row!  The Bank of Canada (BoC) left the overnight target rate unchanged which is what affects your banks Prime rate.  That means there is no change to interest rates or payments for Variable Rate mortgage holders and those with loans or lines of credits attached to Prime.  This is some good news after 10 rate hikes since March 2022 by the BoC in their attempt to cool consumer spending.

Inflation numbers came in lower in September which helped support this decision and the hope is that we see rates come down as planned sometime in the middle of next year.

The central bank’s next decision is due Dec. 6, after two releases of jobs data, October inflation numbers and third-quarter gross domestic product figures. We follow some of our favourite analysts in Canada and Dr. Sherry Cooper is DLC’s very own, Sherry’s comments “I expect the Bank to pause rate hikes for the next six to nine months. When they finally begin to ease monetary policy, they will do so gradually, taking the overnight rate down to roughly 4% by the end of next year.” 

We will welcome her positive outlook above which would mean that your current Variable Rate would drop by 1% at the end of next year.  More and more we have clients opting back to the Variable Rate mortgage rather than shorter term fixed rates as the difference between today’s 3 year fixed rate and today’s variable rate is very close.  All it would take is one rate drop (.25%) next year and that would put their rate lower than the 3 year fixed for the balance of the term.

Our job in our office is to provide you with all options surrounding interest rates, lenders and products, everyone is different so don’t get caught up in listening to people that may not know your situation, do what’s best for you and your family. I would be happy to look at your current situation and put options together for you, whether you are purchasing, refinancing or renewing your mortgage term. Don’t navigate this process alone, let us do it for you at absolutely no cost to you. Email me by CLICKING HERE.  Or book a call with me HERE.

If you want to read Sherry Coopers full press release on today’s announcement, CLICK HERE!

Have a wonderful rest of the week!

Trish
Want to see what Current Rates look like? CLICK HERE

Also, ask us about our unadvertised promotional rates that you may be eligible for as well!

This blog post is apart of our newsletter. Join hundred of homeowners who trust our newsletter to keep them informed by CLICKING HERE.

First Home Savings Account (FHSA)

General Trish Pigott 19 Oct

FIRST HOME SAVINGS ACCOUNT

The First Home Savings Account (FHSA) is a registered savings plan introduced by the federal government in 2022. An FHSA is designed to help you save for your first home tax-free and help you reach your vision of owning a home faster!

What is a First Home Savings Account (FHSA)?

An FHSA combines some of the features of an RRSP and TFSA. Contributions will generally be tax-deductible, and when a qualifying withdrawal is made, the amount withdrawn is not taxable.

How does an FHSA work?

  • Annual contributions are capped at $8,000 up to a $40,000 lifetime contribution limit.
  • A maximum of $8,000 unused contribution room can continue the following year.
  • The account can stay open for a maximum of 15 years or until the end of the year you turn 71

Am I eligible for an FHSA?

To open a First Home Savings Account, you must be:

  • A Canadian resident
  • 18 years or older
  • A first-time home buyer

How is the FHSA different from the Home Buyers’ Plan?

With the current Home Buyers’ Plan, Canadians can withdraw up to $35,000 from their RRSP, subject to eligibility and conditions. The funds must be paid to the RRSP over 15 years.

With an FHSA, eligible withdrawals do not need to be paid back.

What is the difference between the First Home Savings Account, Registered Retirement Savings Plan, and theTax-Free Savings Account?

FHSA RRSP  TFSA
How does it help me buy a house? Invest your eligible contributions and use them for purchasing a qualifying home. Withdraw from your RRSP and use the amount towards your qualifying home purchase under the Home Buyers’ Plan. You can borrow up to $35,000 from your existing RRSP, but the borrowed funds must be paid back within 15 years Invest your eligible contributions and use them for a home purchase (or anything else you want). Amounts withdrawn from a TFSA create additional TFSA contribution room beginning in the year following withdrawal.
What are the contribution rules? $8,000 is the annual contribution limit. Carry-forward rules apply a $40,000 lifetime contribution limit during the Maximum Participation Period. The lesser of 18% of your previous year’s income and the current fixed contribution limit $30,780 for 2023.  You can carry forward any unused contribution room from previous years. No lifetime contribution limit. $6,500 is the annual contribution limit for 2023. You can carry forward unused contribution room from the year you turned 18 and was a Canadian resident for tax purposes. No lifetime contribution limit.
Who’s eligible to open an account?  Canadian residents 18 years or older but not more than 71 years on December 31 of the year you open an FHSA, who have a valid Social Insurance Number (SIN) and are considered a first-time home buyer Canadian residents (for tax purposes) up to the end of the year you turn 71, who have earned income and filed an income tax and benefit return. Some financial institutions may require customers to be the age of majority. Canadian residents 18 years or older who have a valid SIN. There is no upper age limit to hold a TFSA, unlike an FHSA or an RRSP.
Will I get a tax deduction on eligible contributions? Eligible contributions are tax-deductible (except on transfers into your FHSA from your RRSP, although these transfers do use up FHSA contribution room). Eligible contributions are tax-deductible (except on transfers into your RRSP from your FHSA). No. Contributions are not tax-deductible.
Key Advantages Funds in the account grow tax-free, which could mean more money for a qualifying home purchase. You may also be able to transfer funds tax-free from your FHSA to an RRSP or RRIF in your name Funds can be used towards the purchase of a qualifying home under the HBP. Investments can grow within the plan tax-deferred. Funds in the account grow tax-free and you can use the value of the account for anything you like, including towards the purchase of a home.
Limitations An FHSA can only be held until December 31st of the year in which the earliest of the following occurs: the 15th anniversary of opening your first FHSA, the year you turn 71 or the year following your first qualifying withdrawal.

Non-qualifying withdrawals (not made to purchase a qualifying home) are taxable income.

 Under the HBP, any RRSP withdrawal used to buy or build a qualifying home must be returned to your RRSP within 15 years and repayment begins in the second year after the year when you first withdrew funds. If you fail to repay the required amount within the required time frame, that amount will be considered as taxable income in that year. Contributions made to a TFSA are not tax-deductible.

Every dollar counts when purchasing a first home. This product allows you to save and withdraw tax-free, which can help in the long run.

Interested in setting up a new FHSA?  We’ve done the work for you!

Check out a few banks offering you a Bonus to set up your new FHSA!

  • TD currently has a promotion where if you open an FHSA before Oct 31, 2023, and invest $3,000 you could get $100.
  • At Scotiabank earn an interest rate of 5.00% on new FHSA deposits with the Savings Accelerator Account until Jan 31, 2023.
  • At BMO, the FHSA will be available this November. By signing up today you can take advantage of their special 5.03% Short-Term Investment Certificate rate.
  • At Desjardins, open a FHSA and get the introductory promotional rate of 5.00% for a limited time.

If you are curious about the home buying process as a first time home buyer, you can CLICK HERE to book a call to chat about what is required of you on the mortgage half! It is never too early to start preparing for one of the biggest purchases of your life.

Trish & The Primex Team 

 

Your Mortgage Renewal

General Trish Pigott 18 Oct

As our economy shifts and the Bank of Canada is trying to slow inflation with the continuous rate hikes over the past 18 months, we are at a very different time in the mortgage market, especially for those facing a mortgage renewal.

With over 50% of mortgages in Canada coming due in 2025 and 2026, more and more people are being faced with renewing their mortgage into new terms with much higher rates than what they have been used to.  It’s important to know what to look for, what to expect, and how to plan so you can adjust your budget accordingly if needed.

Rates are the highest we have seen since the early 2000’s. This coupled with the government imposed stress test that was introduced in 2016 is making it much harder to qualify for mortgages today. We also saw our last set of major mortgage rule changes in 2017 which have also impacted home owners when it comes to mortgage renewals and qualification.

When renewing your mortgage, you have a few different options to consider;

  1. Renewing your current balance and amortization (total time left on your mortgage) with your current lender into what ever rate they are offering you, and not making any changes at all.  This does not require re-qualification in most cases.
  2. Renew with a *new* lender, keeping your current balance and remaining amortization the same, but shopping the mortgage with all lenders for best rates in the market.  This is the same process of a new mortgage and requires re-qualifying.
  3. Refinance (means changing the mortgage amount and/or amortization) at best rates in the market which involves seeing a lawyer or notary. Most commonly done when accessing equity to renovate, consolidate debts or make another large purchase. This process requires re-qualifying.

Renewal Timeline:

  • 6 months before – we update your file with your current employment and financial situation so that once we are within the 4 month timeline to hold rates, we have all accurate information on file to make the process easier
  • 6 months before – we start discussing if there are any potential changes you want to make to your current mortgage as well as your current cash flow
  • 4 months before – we can hold a new rate for you with the best lender and rates in the market. This is important as the rate market is so volatile that there can be drastic differences (nearly 2%) by securing a rate early vs leaving it to the last minute.  Even though we have a rate held for you, we will continue to then monitor all other banks and if rates come down lower than what we have held with any other lender, we will secure that rate as well so you are protected
  • 2 months before your maturity date, we will ask you to obtain or we will request on your behalf, what your current lender is going to offer you so we can compare it to what we have held for you
  • 30 days before your maturity date you should have made your decision with what route to go as it does take time to either switch your current mortgage to the new lender or refinance your mortgage.  Leaving it to the last minute leaves you at risk of missing on out on previous rate holds or having to accept whatever your current lender offers you
  • Reminder: we have room for negotiation with either a new lender or your current in getting the most competitive rate for you
  • If we did NOT arrange your current mortgage and would like our help with your upcoming renewal, please reply to this email or contact our office
6 Key benefits of have us handle your mortgage renewal for you:
  1. Full product and lender review across all banks
  2. Expert advice and individual mortgage strategy developed based on your personal situation
  3. Rate negotiation on your behalf
  4. Zero cost for our services
  5. Full VIP service at our office rather than be treated like a number
  6. Accessibility, we are available by phone, text or email 7 days a week

CLICK HERE for access to my calendar to book a call to discuss your upcoming mortgage renewal.  Remember to do this at least 4 months in advance of your mortgage maturity.

This blog post is apart of our newsletter. Join hundred of homeowners who trust our newsletter to keep them informed by CLICKING HERE.

Have a wonderful rest of the week ahead!

Trish

The True Cost of Downsizing

General Trish Pigott 10 Oct

Many Canadians consider downsizing during their retirement years. Once their children have left the nest, the choice seems obvious: relocate to a smaller residence or a more affordable town and capitalize on the price difference. For many retirees, the funds from the sale of their home can significantly impact their overall lifestyle and financial well-being.

However, there are downsides of downsizing you should be aware of before you call your Realtor.

Downsizing in British Columbia: A Cost Analysis

The cost of moving is probably one of the most significant downsides to downsizing. To give you an idea of the figures involved, we conducted a cost analysis for a typical downsizing scenario using an example of selling a home in Vancouver for $1,000,000 and buying a condo for $700,000.

This would free up $300,000 in equity while moving you into a smaller home. According to Stats Canada, you need a nest egg of about $450,000 to retire comfortably in Canada. The money from the sale of your house could have a meaningful impact on your retirement finances. But how much of that chunk will you get to keep to boost your nest egg? Below is an estimated list of cost considerations when choosing to downsize:

Fees Downsizing CHIP Reverse Mortgage
Real estate fees (average 7% selling price on the first $100k of the home price, and average 1% on the remaining total) $34,000 N/A
Legal Fees $1,200-$2,400 $300-$600
Land Transfer Tax (Varies depending on province and city) $12,000 N/A
Moving expenses (packing supplies, moving service, garbage removal, etc.) $3,000-$6,500 N/A
Furnishing and upgrades $8,000-$25,000 N/A
Home appraisal $500 $300-$600
Closing fee $500-$2,250 $1,795-$2,995
Total $59,200-$82,650 $2,395-$4,195

 

As you can see, downsizing could cost you between $59,200-$82,650.

If you live in a big city like Vancouver, $300,000 of equity could shrink to just $217,350* after considering these downsizing costs. However, these costs are not the only adverse effects of downsizing to consider.

*Based on $300,000 of equity minus $82,650 (the highest downsizing cost).

The Downsizing Dilemma 

Many Canadians underestimate the financial and emotional costs of downsizing, overlooking various aspects:

  • Home Improvements: Before selling, homes often need upgrades, from simple fixes to major renovations like kitchens or roofs. Also, many invest in staging their homes.
  • Belonging Decisions: Downsizing means deciding which possessions to keep due to space constraints, often leading to emotional challenges and storage expenses.
  • Leaving Family Homes: Leaving a home that carries so many joyful memories, especially if someone is widowed, can be challenging. Relocating might disconnect you from communities and loved ones.

An Alternative to Downsizing in Canada: The CHIP Reverse Mortgage 

The CHIP Reverse Mortgage by HomeEquity Bank can be the ideal alternative to downsizing. Unlock up to 55% of your home’s equity in tax-free cash while staying in your beloved home without leaving the neighbourhood you love. This money improves your retirement finances and can be used to renovate and retrofit the home for accessibility and livability as you age. With no required monthly mortgage payments, the CHIP Reverse Mortgage is becoming a popular solution.

If you have any questions or are curious about what would be best for you, don’t hesitate to contact us at 604-552-6190! Or you can CLICK HERE to book a call with Trish!

Trish & The Primex Team

$20K More in 2024 Contest!

General Trish Pigott 4 Oct

Exciting news for First national clients! 

Imagine beginning the new year with an extra $20,000 towards your mortgage – a substantial boost that can truly make a difference. With such financial momentum, the possibilities are endless, and dreams can become reality.

If you have your mortgage with First National, then you are a lucky one as they are thrilled to introduce the $20K more for 2024 contest, offering First National clients the opportunity to win a $20,000 mortgage prepayment. Entering is simple, and every First National mortgage is eligible for one entry into the contest.

Here are the key details:

  • Contest Period: October 1st – December 15th, 2023
  • Contest Prize: $20,000 mortgage prepayment, to be awarded in January 2024

Entering is a breeze: 

  • Log in to My Mortgage
  • Click on the contest entry image
  • Sign up for electronic Annual Statements

Already registered for electronic annual statements? You can still enter the contest! Click on the contest entry image and answer the contest question.

What would 20K more for 2024 allow you to do?  Feel free to call our office at 604-552-6190 if you would like more information or how to obtain a First National mortgage. Good luck! 

Trish & The Primex Team