RRSP vs Mortgage
Well it's that time of year again and one of the biggest debates around the Canadian personal finance world is the battle between contributing to your RRSP or using the money to pay down your mortgage? The answer is, as always, it depends.
Ok, so lets go through your options.
1. Pay down your mortgage first, then start contributing to your RRSP.
The Smith Manoeuvre
Ever heard of the Smith Manoeuvre? For those who don't know what it is, it's a Canadian wealth strategy to structure your mortgage so that it's tax deductible. There's a tax rule in Canada where if you borrow money to invest in an income producing investment (like a dividend paying stock or investment property), you can deduct the annual interest paid on the investment l ...
The New Credit Market
In this new credit market created by the fallout of the subprime mortgage fiasco in the United States, consumers are running into some very different parameters when looking to borrow mortgage funds right now.
Not so long ago, back in the good old days about a month ago, lenders were falling over themselves trying to get you to borrow from them. In the past couple of ...
Credit Rating Issues - How to fix them?
In my last blog I discussed your Credit Bureau and the Beacon Score that is assigned to you based on your credit worthiness. You may or may not know what your score is but if you are having any of the following issues then you might have a low score:
Trouble making the minimum payments on your credit cards
Your credit rating is a measure of your credit worthiness determined by your record of borrowing and repayment and is reflected by a 'Beacon Score'.
Governed by provincial laws, there are several credit bureau agencies that track your history of how you handle debt. This information is gathered from financial institutions, retailers and other lenders. Mos ...
Tips to Pay Your Mortgage off Early!
Given the increased size of the average mortgage (and amortization) these days it can be somewhat daunting to contemplate the actual amount of interest that you pay over the life of your mortgage. Fortunately, there are a few things you can do to repay your loan early and save thousands of dollars in interest even if you have a fixed rate closed mortgage ...
What is an Equity Take Out Mortgage?
If your home is worth more than your mortgage then you likely have money that you can access in order to use for other purposes. The reasons for accessing equity in your home are numerous but here are a few that come to mind:
How to use your RRSP for a down payment
A great way to access cash for a down payment is through the Home Buyers Plan which is a program set up by Canada Revenue Agency (CRA - formerly Revenue Canada). The Home Buyers Plan (HBP) allows each individual who will be occupying a home to withdraw up to $20,000 from their RRSP to buy or build a home without being taxed. This would mean that thre ...
Home Equity Line of Credit
The home equity mortgage is secured with your property and provides you with an easy and affordable revolving Line of Credit that allows you to use the equity in your home to borrow money. With this type of Line of Credit, you can have access to up to 80% (or more) of the appraised value or purchase price of your home (whichever is lower), less any prior outstanding ...Interest Rates: Fixed vs Variable
What to do?? This is always a tough decision when choosing a mortgage product but what it really comes down to is risk tolerance and your personal situation.
Variable rate mortgages generally have a more attractive interest rate compared to fixed rate mortgages but your rate can change any time, down or up, during your mortgage term. This can be a very b ...
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