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Speaking of Money… It’s Financial Planning Week

October 21st, 2011 No comments

Speaking of Money… It’s Financial Planning Week

October 17-23 is Canada’s third annual Financial Planning Week and as part of its campaign to get more Canadians engaged in their financial wellbeing, Financial Planning Standards Council (FPSC®) hit the streets to hear what Canadians are saying about money.

“Every day is financial planning day at Financial Planning Standards Council and for the 18,000+ Certified Financial Planner® professionals in Canada. But, while many Canadians may have great intentions, they fall into the procrastination trap,” says Tamara Smith, V.P. Marketing & Consumer Affairs, FPSC. “We are putting a call out to every Canadian: this Financial Planning Week, it’s time to take action — even if in small steps — to do more towards your financial wellbeing.”

 

10 THINGS YOU CAN DO TO CELEBRATE FINANCIAL PLANNING WEEK: THINK, TALK, ACT ON IT!
Even small steps can build momentum and make a difference.

THINK!

1. Reflect on your life goals (Own a home? Travel the world? Or simply get by?). Think in terms of shorter and longer-term goals. As well, consider your needs and wants. Financial planning supports your life and it involves much more than just planning for tomorrow. It’s about the continuum of your life, which includes today!

TALK!

2. Talk to your life partner. Money often comes last on the list of relationship conversations but it should be a priority and is an essential part of family life planning. Plan now to prevent money from becoming a stressor on your relationship!

3. Talk to your kids. It’s never too early to teach your kids the value of money and the importance of good financial habits.

4. Talk to a financial planning professional who can help you make sense of it all. CFP® professionals are uniquely trained to help you translate your life goals into meaningful financial strategies and in seeing how all these strategies are connected. Before engaging anyone, learn what to look for and what to ask a prospective planner. See 10 Questions to Ask for starters.

ACT!

5. Learn something new. You can start by going to a Financial Planning Week event.

6. Track your spending so you know where that darn money is going. You’d be surprised of how much you can squeeze out in savings when you are accountable for every dollar spent.

7. Create a monthly budget.

8. Pay yourself first and start a savings and/or investment program. Even small amounts add up if you save regularly.

9. Pay off debt — especially credit card debt that can result in high interest fees for late payments. Keep your credit rating healthy and don’t forget to pay those bills on time!

10. Get help creating a financial plan that looks at the whole picture. CFP professionals say it’s never too early to start, nor do you have to be wealthy to have a plan. Planning is for everyone!

11. BONUS TIP: Brainstorm a few of your own ideas of what you can do to celebrate Financial Planning Week and make them meaningful for you. Remember – it’s about your life.

NOTES TO EDITORS:

•FPSC executives are available for media interviews; also, CFP professionals from various regions across Canada are available to discuss financial planning topics.
•Looking for statistics on Canadians’ emotional and financial wellbeing? Read the highlights on FPSC’s Value of Financial Planning Study.

About Financial Planning Week

Now in its third year, Financial Planning Standards Council (FPSC) and the Institut québécois de planification financière (IQPF) have jointly declared October 17-23, 2011 as Canada’s Financial Planning Week. During the Week, each organization will be spearheading industry events and public outreach activities in their respective markets. Financial Planning Week is part of an ongoing effort by both organizations to make financial planning more a part of Canadians’ lives. Stay up-to-date at www.financialplanningweek.ca / Twitter @FPWeek, and join us on the LinkedIn and Facebook page for Financial Planning Week.

 

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What has happened to the Variable Rate Mortgage?

October 21st, 2011 No comments

What has happened to the Variable Rate Mortgage?

It is dying a slow death!   A couple of weeks ago I was able to get a client prime less 0.85%, today that is not the case!  Tonight one of the last lenders is moving up to prime less 0.15%, which is considered a good variable rate when most of the lenders are at prime.  The reason for this change, we are told, is due to the economy which has shrunk profit margins.

The fixed rate option is looking more and more attractive as opposed to taking a new variable rate mortgage.  The 5 year rate is at an historic low….3.39 for 5 year fixed or the very attractive 4 year fixed rate of 2.99%.  The difference in payment for a variable rate and a 5 year fixed rate is $27.87 per month, based on $100,000 amortized over 25 years or $7.15 for the 4 year rate.

I think the money would be well spent having the rate guarantee for the next 4 to 5 years!

However if you are in one of those converted variable rate mortgage of prime minus 0.50% or more, what should you do?
This is the word on the street!

• The Bank of Canada has indicated that it is not looking at raising the overnight rate anytime soon or at least will hold off until such time as it sees the economy improving.

• The U.S. has no plans to increase rates for the next two years making it more difficult for Canada to raise rates unless the Canadian economy is growing in spite of the sluggish U.S. economy.

• Canada is becoming attractive for investors’ thus larger demand for Canadian bonds.  This demand is keeping the bond yields down thus lower fixed rates on mortgages.

This week is Financial Planning Week, another passion that I have is teaching people about budgeting, I hope you find the article interesting!

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Variable rate may no longer win

September 1st, 2010 1 comment

The answer to the age-old question of whether to go long or short on your mortgage is unclear yet again.

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

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 under 4%.

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.

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.

For updated rates and more information on the right mortgage for you please visit www.designermortgages.ca/rates.htm or call 1-866-824-8057

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The Best of Both Worlds!

June 10th, 2009 No comments

The Best of Both Worlds!

 

A new mortgage product has recently been launched.

This new and innovative product called the 50/50 WISE mortgage. Don’t choose between Fixed and Variable. Choose Both!

They key aspects to this new mortgage are detailed below:

 

  • 50% of mortgage is at the lowest ARM rate in the Industry (currently, prime +.40 = 2.65%). With flexibility to convert to a fixed rate mortgage.
  • 50% of the mortgage is secure at a competitive 5 year fixed rate.
  • Combined total is at the lowest current 5 year effective rate of approximately 3.38% (weighted average interest rate given today’s current pricing!) 
  • Effective rate is lowest when mortgage balance is greatest…for maximum interest savings impact.
  • It would require a move in prime to north of 3.50% to reach a 3.99% effective weighted average rate.
  • Provides flexibility to prepay 20% annually or increase payment 20% annually on the portion of best advantage…
  • Bank of Canada statement and intention is to leave the B. of C. rate steady until at least June 2010.

 

Ideally suited for:

  • Customers who are unsure whether to go Variable or Fixed.  This product eliminates the biggest dilemma facing mortgage borrowers in today’s economy.
  • Customers who want a low interest rate and are more risk-averse than a typical ARM client.  The weighted average interest rate on this mortgage is approximately 3.38% given today’s current pricing!  And only 50% of the mortgage is subject to interest rate risk.
  • Customers who want added flexibility in paying down their mortgage.  The two portions operate independently of each other, so your customers can choose to make prepayments on the fixed portion which has the higher interest rate or they can choose to pay down the ARM portion aggressively which in turn further minimizes their future interest rate risk!

 

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