17 Apr

Could CMHC change its ‘one-size fits all’ mortgage insurance to reflect real risk?

General

Posted by: Kristina Crosbie

Buy a house with less than a 20% down payment and you have to get mortgage default insurance. There’s no choice. The rules are dictated by Ottawa and protect the banks, in the event you default.

 

The rate you’ll be charged bears very little relation to your individual risk. You have a fantastic job, a great credit history and live in a part of the country where the housing market is on solid footing? Forget it, you’re paying the same premium as anyone else and it’s mostly based on your down payment.

 

“The mortgage insurance product, irrespective of who sells it, is the same product. There is less product differentiation that there is among choices of 89 octane unleaded gasoline,” says Finn Poschmann, Vice President of Research for the CD Howe Institute. “In gasoline, at least you can choose among ethanol content levels and detergents. Not so with mortgage insurance.”

 

Starting May 1st consumers will pay even more for this insurance, which provides a backstop to the entire Canadian economy given Ottawa is on the hook for close to the $1 trillion in mortgages it guarantees.

 

Click here to see the full Financial Post article.

17 Apr

Bank of Canada monetary policy decision: The 4 key takeaways

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Posted by: Kristina Crosbie

The Bank of Canada held its benchmark rate steady today, and kept its ‘neutral’ stance on future moves in an as-expected policy statement that had the market, if not economists, stifling yawns.
 
“When in doubt, do nothing, and for the most part, that’s what the Bank of Canada opted to do in today’s monetary policy statement,” said CIBC Economist Avery Shenfeld.
 
Overall, the message was little changed, though the bank cut its growth forecast on the year from 2.5% to 2.3% on the impact of the harsh winter. It also pushed up its call for inflation this year, while at the same time warning about the risks of low inflation.
 
“Somehow, the Bank managed to find a way to sound even more concerned about ‘lowflation’ even as they upgraded the forecast for headline inflation,” said BMO Chief Economist Douglas Porter.
 
Click here for four key takeaways from today’s Bank of Canada monetary policy decision courtesy of the Financial Post.

7 Apr

Money Saving Monday – Saving Money Through Online Sources

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Posted by: Kristina Crosbie

Money Saving Monday – Saving Money Through Online Sources

how can i save money

  If you’re even the tiniest bit inclined to put in the work, there are lots of ways to save money.

We all know about some of them. Coupons are usually the first things that come to mind when we talk about saving money on everyday things. Yes, I know that the little blighters can be tricky. You have to remember to bring them with you and you have to be careful to only clip coupons for the items you would be buying anyway. Otherwise you will go tumbling headlong into the ‘I don’t really need it but it was on sale’ trap and end up spending more rather than saving. You also need to find the coupons in the first place which may mean spending some of your precious spare time with a giant pile of fliers in your lap. Sorry about that. Saving isn’t always easy.

A more ambitious way to attempt to save on the little things is to do some research. What items do you almost always include on your grocery list? Make a list of what you usually buy and then compare the cost (plus any applicable taxes) of adding those items to your basket at three retailers. I’m including personal care items in this list as they’re often part of a weekly or bi-weekly shop and are sold at most grocery stores. Make sure you’re recording the regular price of the item rather than the sale price (if something happens to be on sale) because you want to know how much it would cost you to  habitually purchase your necessities at each retailer. If the cost of your ‘basket’ is significantly lower at a particular store, it may be time to make a switch. There really isn’t any way to do this kind of comparison without doing a little legwork. I said it was ambitious.

So much for the everyday items. What about big ticket items? Perhaps you’ve just purchased your first home or perhaps your growing family means that you need to upgrade to larger digs. You’re going to need furniture, right?

Why not check out sites like craigslist.ca or kijiji.ca? Or, if you live in or near a major urban hub, there will probably be a site dedicated specifically to your area like used usedottawa.com. These sights deal in everything from furniture to job postings and if you check regularly, you might just find something (or lots of things) at bargain prices compared to what you would pay for those same pieces if you purchased them from a showroom or big box store. The bonus? You’re more likely to find unusual pieces that are full of character and that aren’t already in half the homes in the nation. You may even be able to haggle over the price and save yourself even more $$$.

There are also Groupons or Wagjag. These are local deals offered online via the Groupon website. They’re usually limited time offers and can apply to everything from items for the home to deep discounts at local restaurants and spas. You pay online for the deal and will have to present some kind of proof of purchase to claim it, either in the form of a printed paper receipt or an electric receipt on your smartphone. There are great deals to be had on the Groupon webiste but remember, great deals are not a licence to shop when you’re on a limited budget. You’re looking for deals on things you need, (like an oil change for your car), and not on things you want.

There are a couple of caveats to be aware of when buying anything second-hand. If you are purchasing items for your children, keep safety firmly in mind. Items like safety seats for cars come with expiry dates and other furniture for children may have been recalled or may not meet current safety standards. You can consult http://www.healthycanadians.gc.ca for a list of items that may be unsafe.

You will need to make arrangements to get your purchases delivered to your home if the seller does not offer delivery as part of the deal. Also, be aware of buying certain soft furnishings. Items with soft surfaces like mattresses are breeding grounds for bacteria of all kinds and microbes of all kinds.

Is all of this as easy as walking into a showroom and picking out the latest in home furnishings and electronics? Maybe not, but there are some budgetary benefits in shopping for used items that may not be that obvious. Sure, you’ll probably end up paying less for a bed frame. That’s an obvious benefit. If you’re purchasing from a private vendor, they probably won’t take a credit card. The upshot of this is that you’re more likely to spend money you have and not be tempted into a ‘buy now, pay later’ scheme which can leave you scrambling to pay off furniture purchases before a truly exorbitant interest rate kicks in. So pat yourself on the back, you savvy shopper and sigh the perfectly blissful sigh of those who spend wisely.

7 Apr

Money Saving Monday – Saving Money When Renovating & Re-modelling

General

Posted by: Kristina Crosbie

Money Saving Monday – Saving Money When Renovating & Re-modelling

home-renovation-cost-estimator

Our homes are important to us and we want to make them as pretty and as comfortable as possible. I, for one, spend as many blissful hours as I can manage planning the home improvements I would make if I had the budget. The amount of money I spend in my dreams is really quite exorbitant. In reality I have to be much more practical and frugal. I want a beautiful home but I do not have unlimited means to facilitate my dreams.

Ahh, there it is. We’ve come back around to money again and it didn’t even take that long. But isn’t that what this is all about? Money? There’s no denying that home improvements are big business. IKEA  is reported to make profits worth several billion annually and retailers like Canadian Tire and The Home Depot consistently post numbers that indicate a steady growth in sales. Clearly I am not the only one with home-improvement related ambitions.

If you decide to renovate your home, one of the important questions you need to ask yourself is WHY you’re undertaking that renovation. Are you renovating the home to make it more compatible with your lifestyle or are you renovating it with the idea of putting the house on the market and selling it? The answer to this question could (and probably should) have an impact on your renovation budget.

If you plan on residing in the house for any length of time following the renovation, you may be willing to stretch your renovation budget a little because you know that the improvements you’re making are ones you’re going to get to enjoy. You don’t have to worry about pleasing anyone but yourself (at least for the time being) and you can plan your renovation accordingly.

If, however, you plan on remodelling with a view to selling your property, all kinds of other considerations come into play. Not only do you have to make your space aesthetically pleasing to potential buyers you also have to weigh the cost of the renovation against the value it adds to your home.