MORTGAGES

What is a mortgage stress test?

A mortgage stress test is a mandatory Canadian qualification rule that checks if a borrower can still afford their mortgage payments if interest rates rise, it ensures borrowers can handle higher payments. This applies to insured and uninsured. 

What is the difference between a mortgage term and amortization?

A mortgage tern is the duration of your contract with lender, fixing the interest rate and conditions, while the amortization period is the total time required to pay off the entire mortgage. You will renew your term several times before the amortization period ends. 

What is the minimum down payment in Canada?

In Canada, the minimum down payment is 5% on the first $500,000 of a homes purchase price, and 10% on the portion above $500,000. For homes priced at $1.5 million or more, a minimum 20% down payment is required. Down payments of less than 20% require mandatory mortgage default insurance. 

What are prepayment penalties?

A prepayment penalty is a fee charged by leaders when a borrower pays off all or part of a loan (typically a mortgage) earlier than scheduled, often within 3 to 5 years of closing. Lenders use this fee to recover lost interest income. It usually applies to closed mortgages when refinancing, selling, or paying large lump sums. 

Should I choose a fixed or variable rate?

Fixed rate mortgages offer stability with consistent payments, while variable rate mortgages fluctuate with the leaders prime rate, potentially offering lower rates and savings over time. Fixed rates provide security against rising costs, whereas variable rates carry risk but often have lower break penalties. Choose fixed for stability, variable for potential savings. Ask us which would work best for you!

What are closing costs?

Closing costs are one time fees paid to finalize a real estate transaction, sperate from the down payment and purchase price. They generally range from 1.5% to 4% of the homes purchase price. These costs cover legal fees, taxes, and administrative expenses required to transfer property ownership. 

How can I pay off my mortgage faster?

To pay off your mortgage faster, maximize your repayment privileges by making extra payments, such as annual lump sums. switch to accelerated bi-weekly payments to make one extra monthly payment per year. Increase your regular payment amount and choose shorter amortization period to reduce interest costs. 

INVESTMENTS

What is investing and why do it?

Investing is the process of purchasing assets, such as stocks, bonds, or real estate, with the expectation that they will generate income or appreciate in value over time, putting money to work rather than letting it sit idle. It is done to grow wealth, and beat retirement. 

How do I start investing?

To start investing, set clear financial goals and timeline, after that you will want to establish a budget and emergency fund. After you decide those book an appointment with us to get started!

What are the most common investment types?

The most common investment types include stocks (equities), bonds (fixed incomes), mutual funds, exchange traded funds (ETFs), and cash equivalents like GICs. These vehicles allow investors to achieve growth, income, or safety depending on their risk tolerance. Stocks offer high growth potential, while bonds provide steady income with lower risk. 

How much money do I need to start investing?

You can start investing with as little as $1 - $100, as we are able to offer zero - account minimums, factual shares and commission free trading. Talk to us today about getting started!

How do I choose between RRSP and TSFA?

Choose an RRSP if you are in a high tax bracket and expect a lower income in retirement, or if you need to lower your current taxable income. Choose a TSFA for short term goals, emergency funds, or if you are in a lower tax bracket with 100% tax free, flexible withdrawals. Ideally, max out the TSFA first is you are young/low income, then shift to RRSPs as your income rises. 

What is risk tolerance?

Risk tolerance refers to an investors willingness and ability to endure potential losses and market fluctuations to seek higher long term returns. It is a subjective measure of comfort with uncertainty often classified as aggressive, moderate or conservative. 

INCOME TAX

What is the income tax filling deadline?

For personal tax filing the deadline is April 30th, if you are self employed the deadline is June 15th. For most taxpayers they are due by April 30th. 

What if I am self employed?

As a self employed individual, you must report all business income on your personal T1 return form using Form T2125, pay both employee and employer portions of CPP, and pay taxes via instalments if necessary. 

Do I have to file if I have no income?

Yes, you should file a tax return even if you have no income. While not legally required if you owe $0, filing is necessary to receive government benefits, refundable credits and potential refunds. It also helps build RRSP contribution room and ensures uninterrupted payments. 

What is the basic personal account?

The basic personal amount is a non refundable tax credit that allows Canadians residents to earn a set amount of income tax free. It reduces federal income tax payable, acting as a personal exemption, with higher amounts for lower income earners. 

What do I do if I made a mistake in a previous return?

If you made a mistake on a previous tax return , you must wait until you receive your Notice Of Assessment, the request an adjustment from the Canada Revenue Agency. Come to use with your taxes so you never have to worry about mistakes!

What are some common deductions?

Common Canadian tax deductions, which reduce taxable income, include Registered Retirement Savings Plan contributions, union/professional dues, child care expenses, moving expenses, and employment expenses like home offices. Other key deductions involve medical expenses exceeding specific thresholds, support payments, and carrying charges for investments. 

What is the home buyers amount?

The home buyer amount is a federal non refundable tax credit in Canada that allows first time home buyers to claim $10,000 on their income tax return. This creates a maximum tax reduction of $1,500 to help with closing costs. 

What is a notice of assessment?

A notice of assessment is an official summary sent by the Canada Revenue Agency after processing your annual income tax return. It details your tax assessment summary, including final tax payable or refund amount, any changes made to your filing and you RRSP deduction limit for the following year.

What if I can't pay my balance owing?

If you cannot pay your tax balance by the April 30th deadline, you should still file on time to avoid late filing penalties. Immediately contact the Canada Revenue Agency to set up a payment agreement, which breaks your debt into smaller manageable payments. Ignoring the debt can lead to interest, penalties or legal action like wage garnishment. 

What happens if I file late?

If you file you tax return late and owe money, the CRA will charge a 5% late filing penalty on your balance, plus 1% for each month it is late. Interest also compounds daily on unpaid amounts.