Some more weight has been added to the scale that is tipping in favour of an interest cut in the United States.  Economic growth, in the U.S., slowed to 2.1% in the second quarter, down a full percentage point, from 3.1% in the first quarter.

A key factor in the slowdown is a 5.2% drop in exports.  Many analysts see that as self-imposed pain brought on by the Trump administration’s trade fight with China.  The dispute is also contributing to the slowdown in Europe, and elsewhere.

The drop in GDP growth is seen as additional ammunition for those targeting the U.S. Federal Reserve for a rate cut this week.  However, there are prominent analysts who say a cut is not needed at this time.  U.S. growth remains above the five-year average and unemployment is at 50 year lows.

Last week the European Central Bank held the line on its benchmark interest rate, but made it clear it intends to take steps to boost the Euro-Zone’s sagging economy.  The ECB is signalling the distinct possibility of rate cuts and it is also looking at restarting its simulative bond buying program.

The Bank of Canada remains firmly on the sidelines.  It is content with the country’s employment rate, inflation, and its current growth figures.

Jul 29, 2019
First National Financial LP

Some great insight into when it’s the right time to get into the market from our friends at EQ Bank.

Some great tips from our friends at Pillar & Post on helping to maintain your property’s value!

Exterior Upkeep To Do Now

Try these essential tips to keep your home’s exterior in good shape and to help preserve its value.

ROOF AND SIDING

• Use binoculars to check the roof for missing or damaged shingles. Flashing should be tight and secured to prevent leaks. Have any problem areas repaired by a licensed, qualified roofing contractor.
• Repair any cracks or gaps in the siding and around windows. Make sure these are repaired before you decide to paint.
• No need to paint? Power washing makes quick work of removing built up dirt and mildew and will brighten your home immediately. You can hire a professional to do this, or rent the equipment by the day or half day.

GUTTERS AND DRAINAGE

• Clean debris from gutters and evestroughs, then flush with a garden hose.
• Check all downspouts to make sure they direct water away from the house.
• Clear basement window wells of debris, weeds, and other materials. Don’t use window wells to store items such as garden hoses or tools. Obstructing the wells’ drainage system can cause water to leak into the house.

WALKWAYS AND DRIVEWAY

• Repair gaps and cracks using materials appropriate for your specific surfaces, such as concrete, asphalt, etc.
• On walkways and steps, repair uneven or heaved surfaces that can create a tripping hazard.

A well-maintained exterior not only looks good and can help prevent big problems down the road, it will make you feel good about coming home every day.

Some great advice that will serve you well from our friends at Planswell.

When you ask someone where they get most of their financial advice, you’ll likely receive answers that mostly include family and friends. Unfortunately, relying on your social circles to provide financial advice leaves lots of room for (accidental) misinformation. That’s why we’ve rounded up four common personal finance tips that will actually fail you in the long run.

1.  If you have any debt, paying it off is your only priority

It is essential to understand that debt can fall into one of two separate categories: good debt and bad debt. A few examples of good debt include a mortgage or a student loan (basically, any accounts that hold an incredibly low interest rate and was taken on for some sort of investment purpose).

Bad debt is what you have to be cautious of. Most often, bad debt is synonymous with credit cards, as the debt offers you little to no value and credit cards are notorious for having painfully high interest rates (upwards of 20% per month in some cases). The best use of your money is paying off bad debt before paying off any other type of loans.

While there are some circumstances in which it may make sense to pay off your good debt early, like your mortgage, it’s not always in everyone’s best interest. By extending your mortgage and freeing up cash flow to invest and reap the benefits of compounding interest, you’ll likely be in a better situation to reach your goals – whether that be sending a child to school or retirement.

Bottom line, everyone is different and your mortgage and debt decisions should be driven by your financial plan.

2.  If you save 10% of your income throughout your life, you’ll be retirement ready

This one is pretty straight forward to debunk; everyone needs to save a different amount based on their current lifestyle and future goals. Each  dollar that you save won’t be used until the future – figuring out exactly how much to put away (and where to put it) is not always straightforward.

A lot goes into how much you should be saving such as your:

• Age
• Marital status
• Children
• Pension, if any
• Career growth opportunities

And many other factors. There is no way one single savings rule could blanket all of those different situations. For example, starting to save 10% at the age of 22 as opposed to starting at 32 will leave two different people in very different retirement situations.

The best way to combat this myth is to have a financial plan. By building a financial plan, you will know exactly how much savings are required to maintain your lifestyle in retirement (and where those savings should be).

3.  You don’t need insurance when you’re young and single

Early in your career, you may not have much in terms of savings and investments yet, so a financial setback could put you in debt. But these are also your prime growth years to get you to those peak earnings. Insurance can help keep things in balance.

Your early career sets the stage for how the rest of your life will play out – it’s your responsibility to ensure you’re doing everything you can to keep things on track. Critical illness insurance is an inexpensive way to protect yourself and should be something young, single people should consider as a key part of their financial plan.

To really understand and combat where this false financial tip is coming from, is to always understand and ask how someone selling insurance gets paid. Then you can protect yourself against being oversold types of insurance that you don’t need or told you don’t need any when you really do.

4.  Invest in something because it’s a “winner”

If you want to be a successful investor, emotions are the enemy. Don’t get overly excited when your investments go up and don’t panic when they go down. Know that you’re in it for the long game. You have to trust that the market has reliably gone up for decades. That means if you’re focused on the long term and keep adding to your portfolio every month, you will be successful.

Knowing that no investment is a sure thing is a key part to being a successful and happy investor. Instead of banking on one mutual fund with high fees or that pot stock your cousin told you about, invest in an efficient, low-cost portfolio of Exchange-Traded Funds (ETFs) that contain stocks and bonds from a broad mix of great companies.

When it comes to taking financial advice, you always have to be cautious. Everyone has different goals, lifestyle expectations and situations so there is no hard and fast rule that applies to everyone across the board. That’s why we built Planswell. We believe everyone needs a personalized financial plan that will take into account their specific situation to optimize their investments, insurance and borrowing.

Some insight on the market in both Toronto & Vancouver. If you want to understand our current real estate market, it’s worth a read.

When you’re self-employed, qualifying for a mortgage can be difficult. Here’s some great tips from our friends at rate hub.

Self-employment certainly comes with its benefits; you get to be your own boss, you get to make your own hours, and you get to build a company that’s all on your own, enjoying the spoils along the way. It does, however, have its challenges; long hours, a lack of support, and, in the case of buying a home, higher barriers to entry.

It’s no secret that qualifying for a mortgage as a self-employed Canadian is more difficult than for those in more traditional professional roles but, with some planning, self-employed Canadians won’t have too much trouble getting into the housing market.

The key, according to James Laird, president of CanWise Financial, is to be organized and avoid cutting corners when it comes to taxes.

“Make sure your documentation is all in order,” he said. “Anyone self-employed who might be considering minimizing their income through earning in cash and not declaring it, or writing down as much as they possibly can should realize there is a trade-off for their tax strategy and getting a mortgage.”

Self-employment in Canada

First, some background on self-employment in Canada.

At the end of 2017, 2.8 million Canadians (15% of the workforce) were self-employed, according to Statistics Canada. Those numbers were backed by up CMHC in mid-2018.

That’s a lot of Canadians who, just like more traditionally employed Canadians, dream of home ownership. However, self-employed Canadians tend to have a more arduous process when qualifying for a mortgage.

Qualifying for a Self-employed Mortgage

The problem with qualifying for a self-employed mortgage is that it’s difficult to prove income to lenders. That, coupled with the fact that many business owners tend to expense as much as possible to minimize the taxes they pay, lenders have to be a little more discerning when it comes to issuing mortgages to them.

Prior to 2014, self-employed Canadians had a fairly easy time qualifying for a mortgage. However, at the end of that year, the Office of the Superintendent of Financial Institutions (OSFI)—the country’s banking regulator—introduced Guideline B-21, which requires federally regulated banks to look more closely at self-employed incomes before approving a mortgage application.

So, along with providing 2-3 years’ worth of notices of assessment and tax returns, self-employed borrowers must also provide the following;

• Proof that your HST and/or GST is paid in full;
• A copy of your business licence or articles of incorporation showing you’re licenced;
• Financial statements for your business. You have to ready to explain your business—your income, expenses, and when you’ll break even;
• Proof that you are a principal owner in the business;
• Client contracts showing expected revenue for the coming years; and
• Have a down payment available of at least 15%.

The good news, though, is that the government has made efforts to address the additional hurdles self-employed Canadians face when trying to purchase a home.

The Canada Mortgage and Housing Corporation (CMHC) announced last summer changes that are meant to make it slightly easier for certain self-employed Canadians to get a mortgage.

The changes were meant to allow lenders more flexibility when evaluating applications for these borrowers. They went into effect in October and allow borrowers to submit Proof of Income Statements, and Statements of Business or Professional Activities as additional ways of proving income.

So, while self-employed Canadians might have to provide more documentation, an applicant with the right documents in order – and the right risk profile — shouldn’t have too much trouble qualifying for a mortgage in 2019.

The Bottom Line

It might be a little more time consuming to get a mortgage as a self-employed Canadian, but with diligent planning, strong organizational skills, and a dedication to properly recording income for tax purposes, achieving the dream of homeownership is easily attainable. And, to make sure you get the best mortgage rate available, make sure to speak to a mortgage broker.

JUNE 28, 2019

By Ratehub.ca

Housing affordability got a little better in Canada in the first quarter of this year, but not so much that anyone would really notice.

The latest report from one of the country’s big banks shows a 0.3 percentage point drop in its affordability measure for Q1.  It is a small reduction but it marks the second straight quarter of decline.  The measure now puts the cost of home ownership at 51.4% of household, pre-tax income, including mortgage payments, utilities and property taxes.

The report cites “policy-engineered market downturns” for the improvement in affordability.  It also points out that those downturns have not happened where they would have the greatest impact, namely Vancouver and Toronto.  Cost of ownership in the GTA clocks-in at 66%.  In Vancouver it is a staggering 82%, even after a 2 percentage point drop in the first quarter.

Victoria and Montreal are also showing up as hot spots.  Even though Victoria saw affordability improve by a full percentage point, it still stands at 58.6%.  Montreal is 44.3%; steady for the last two quarters but up from the long term average of 38.6%.

Encouragingly the report notes that, in nine of the 14 markets tracked for the survey, between 46% and 56% of families “would be able to cover the cost of owning an average home.”

Jul 2, 2019
First National Financial LP