Category: News

The New 2018 Mortgage Rules
What are the 3 new 2018 mortgage rules?

It’s going to get a lot harder for some home buyers to get a mortgage in 2018. That’s because the Office of the Superintendent of Financial Institutions (OSFI, Canada’s banking regulator) introduced three new rules on mortgage lending that takes effect in 2018 and the new rules will hit first-time home buyers and those thinking of refinancing their homes the hardest.
1. Stress Test
  Starting on January 1, 2018, the OSFI has set a new minimum qualifying rate, or ‘stress test’ for all prospective home buyers, even those with a down payment of over 20%. Before the new, tougher rule, only buyers that had a down payment of less than 20% had to make sure they could pass a stress test. Regardless of how much money you save for a down payment, if you don’t pass the new stress test, the bank won’t give you a mortgage.Under the new mortgage stress test, potential home buyers need to qualify for a mortgage at a rate that is the greater of two indicators: either 2% higher than the mortgage rate they qualified for, or the Bank of Canada’s 5 year benchmark rate, which is currently at 5.14%. Before the new stress test, home buyers or owners qualified at the rate offered by the lender. The actual mortgage payment will still be paid at the negotiated rate, but a higher calculation is used for qualifying purposes.
2. Enhanced Loan-To-Value Measurements
  Traditional mortgage lenders (Canada’s big banks) need to ensure the Loan-To-Value (LTV) ratio remains “dynamic.” That means it needs to be adjusted to local market conditions. The OSFI insists that lenders (excluding private lenders) have internal risk management protocols in higher priced markets, like Toronto and Vancouver. A LTV ratio is a number that describes the size of a loan compared to the value of the property.Canada’s big banks use the LTV ratio to determine how risky a loan is; the higher the LTV ratio the greater the risk. For example, if property values decrease following a housing bubble, the LTV ratio could actually rise and be higher than the total value of the property. In which case, it’s quite possible that you have negative equity in the house.
3. Restrictions Placed on Certain Arrangements to Avoid LTV Limits
  Mortgage lenders (again, this does not include private lenders) are not allowed to arrange a mortgage or other financial product with another lender that gets around the maximum LTV ratio or other limits placed on residential mortgages. If you apply for a mortgage with a LTV ratio of 80% and the lender can only approve you for 60%, in the past, the lender could partner with a second lender for the additional 20%, bundle it together to get a complete LTV loan of 80%. Traditional lenders cannot do this anymore.
What does this mean for homebuyers and sellers?

The three new mortgage rules that kick in as of January 1, 2018 will hurt the fastest growing segment of Canada’s mortgage market—uninsured mortgages. That’s one out of every six prospective homebuyers in the country.

The strict stress test, which is meant to ensure borrowers can afford to pay their mortgage at a higher rate, is now being applied to all home buyers, even those with a down payment of 20% or more. Once the tests are in place, it is estimated that it could lower a family’s purchasing power by up to 21%.

Economists say the stricter mortgage rules will also negatively impact softening housing markets across the country. It is expected the tougher mortgage rules, once fully implemented, will depress housing demand by up to 10%.

If you’re a homebuyer and want to refinance a mortgage, the new mortgage lending rules will be a lot more difficult to negotiate.

Should you be worried?

If you’re a first-time home buyer, the stricter mortgage lending rules mean you might need to rent for a little longer or wait until your income increases before you can buy a home. Because the purchasing power does not go as far as it once did, first-time home buyers might need to consider something besides a detached house—a townhouse house or a condo. Or, first-time homebuyers may need to get a co-signer to qualify under the strict new rules.

There are other options though. Keep in mind; the stricter mortgage lending rules only apply to those homebuyers looking to secure a mortgage with one of Canada’s federally regulated mortgage lenders, which does not apply to private mortgage lenders.
February 6, 2018
Budget Your Way to Your Financial Goals
Budgeting really isn’t that bad. Here are six easy steps to achieving your financial dreams. With a new year just over the horizon, it’s time to make a few resolutions. If you haven’t yet crafted a budget, now is the time to do so for 2018.

Regardless of whether you want to take a trip to Hawaii, buy a fancy new set of wheels or simply save more and spend less, a budget can get you there. Following are six steps to budgeting to your financial goals.

Step 1: Set Your Goal

What do you want to save your money for?
- Go on a vacation
- Buy a house
- Have a security blanket in the bank
- Merely pay the bills each month, with a little left over
Budgeting can help with every one of these goals. In addition, having a concrete goal increases your chances of sticking to the budget. Some people even look for motivation by creating dream or vision boards with photos representing their goal.

Step 2: Track Your Expenses

Getting a handle on where you spend money is important for two reasons:
- It can help identify leaks in your budget. These might include the $100 a month gobbled up by daily fast-food breakfasts.
- It can help you make a realistic budget. If you are currently spending $800 a month on groceries, budgeting for $500 is probably setting yourself up for failure.
The old-fashioned way to track expenses is to collect receipts and keep a log of every penny you spend for the next month. However, you can make the process simpler by signing up for a free account with Mint.com. This service tracks expenses automatically and neatly categorizes them for you. Best of all, it doesn’t cost a dime.

Step 3: Write it Down

Now that you’ve tracked expenses, use those amounts as a guide to create a written budget. Whether you use an online tool, an Excel spreadsheet or a notebook and pen is up to you. But you want to have the budget recorded in a location where it can be easily accessed and changed as needed.

It’s a good idea to always estimate your income low and expenses high. It’s better to reach the end of the month and find you have extra money in the bank than to come up short. In addition, make sure to put a name to every dollar. Maybe you finish with the monthly bills and have $200 left over. Don’t leave that as a catch-all slush fund; decide what you’re going to do with it. Maybe $100 will go into an online savings account, $50 will be an extra debt payment and $50 will be mad money.

Step 4: Monitor Your Progress

Once you have it written down, don’t ignore your budget. Make a point of comparing your actual expenses with your budget on a regular basis, such as each payday.

If you’re using Mint.com, it’ll be easy to quickly see how much you’ve spent so far in each category for the month. Then, you can make adjustments as necessary. For example, if you’re budgeting $50 for clothing and have spent $75, you’ll need not only to stop buying clothes, but also to make an adjustment elsewhere in your budget to make up for the extra $25.

On the flip side, maybe it’s the last week of the month, and you haven’t spent a dime of your entertainment budget. In that case, it’s time to make a date and have some fun!

Step 5: Get a Coach

Maybe you’re feeling overwhelmed. A budgeting coach can help. Make sure to do your homework and find a reputable company to work with and ask about any fees. You should be able to get budgeting help for free.

As an alternative, you can ask a money-savvy friend for help. In either case, having someone walk with you step-by-step through the budgeting process can help you make more sense of how to create a realistic spending plan for your money.

Step 6: Stay Flexible

Finally, your budget is a living document. Unlike your slow cooker, you shouldn’t set it and forget it. Instead, regularly evaluate it and make changes as necessary. Always blowing through the food budget? You may need to increase it and consider where else you can cut back. In addition, as your income, expenses or goals change, your budget should be adjusted to reflect your new circumstances.

Ultimately, your budget is not about restricting money, it’s about empowering it. A good budget finally puts you in control of your dollars and allows you to dictate where money is going instead of letting silly, incidental purchases drain your bank account.
January 2, 2018
Business for Self? Get to Know Our Stated Income Product
Get to Know Our Stated Income Product

This program is designed for self-employed borrowers who are unable to provide traditional income verification but have a proven two year history of managing their finances responsibly. Eligible borrowers typically own a small business for a minimum of two years. In addition, the borrower is required to declare their income which should be reasonable based on the industry, length of operation and type of business.

For Purchases Only
Insured Stated Income 65-90% LTV

To Apply – We Need to Know:
- Income amount confirmed by your most recent Notice of Assessment
- Stated gross annual business revenue
- Business type/profession (e.g. landscaping, bookkeeping, etc…)
- Ownership structure and the percentage of ownership (e.g. sole proprietor, partnership or incorporated)
Borrower Qualifications:
- Minimum 2 Years Business for Self
- Most recent Notice of Assessment confirming no outstanding income tax arrears
- Strong credit history
- Income must be stated and reasonable based on industry, length of operation and type of business
- Commission income is ineligible
Documentation Requirements:

Minimum 2 years self-employed confirmed by way of any one of the documentation below:
- Articles of Incorporation
- Business License
- GST/HST Return
- 2 years T1 Generals with Statement of Business Activities
- Audited Financial Statements for the last 2 years
November 1, 2017
Your Fall Home Maintenance Checklist
Your fall home maintenance checklist. Prepare your house and yard for the cold weather with this important list of things to do. Fall is a good time to take care of big home repair projects before shorter days (and in many areas, ice and snow) make outdoor work too difficult. And if you do live in an area with cold winters, take some time this fall to boost energy efficiency throughout your home and prevent damage from winter storms with proper tree care. Check these items off your list this season, and you can rest easy knowing that your home and yard are ready for winter.

Tasks to Check Off Your List in Less Than a Day

Stock up on winter supplies. If you live in a region with cold, snowy winters, fall is the time to prepare.
- Check the condition of snow shovels and ice scrapers; replace as needed.
- Pick up a bag of pet- and plant-safe ice melt, if needed.
- Restock emergency kits for car and home.
- If you use a snow blower, have it serviced and purchase fuel.
Shut off exterior faucets and store hoses. Protect your pipes from freezing temperatures by shutting off water to exterior faucets before the weather dips below freezing. Drain hoses and store them indoors. Drain and winterize irrigation system, if using.

Check walkways, railings, stairs and the driveway for winter safety. When the landscape is covered in ice and snow, just walking from the driveway to the front door can be a challenge. Make navigating around your home safer by checking that all stairs are in good shape and have sturdy railings, and that the driveway is in good repair to make for easier shoveling.

Test outdoor lights and replace bulbs as needed. As the days get shorter we rely more on exterior lighting, both for safety and ambiance. Test lights on the front and back porch, on the garage and in the landscape, and replace bulbs as needed.

Check safety devices.
- Test smoke detectors and carbon monoxide detectors; replace batteries as needed.
- Check the expiration date on your fire extinguisher and replace if needed.
- If you haven’t checked your home for radon, fall is a good time to do so — as the weather gets cooler and windows stay shut more often, radon is more likely to become trapped in your home.
Vacuum radiators, baseboard heaters and grates. Get ready for heating season by clearing away dust and grime from radiators, baseboard heaters and heating grates. If your radiators have removable covers, take them off and vacuum beneath the cover before replacing.

Tackle These To-Dos Over a Weekend

Rake leaves. Leaves look beautiful blanketing the ground, but leaving too many leaves on a lawn over winter in a snowy area can inhibit spring growth. To make the job easier, choose a lightweight rake, wear gloves to protect your hands and use handheld “leaf scoops” to bag leaves quickly.

Seal gaps where critters could enter. Mice need only a tiny gap to be able to sneak into your house and raid your pantry. And with colder weather coming, all of the little critters out there will be looking for warm places to make a home. Fill small holes and cover any larger gaps securely with heavy-duty hardware cloth to keep the wildlife outdoors.

Care for trees and shrubs. It is important maintenance to trim the ‘dead’ out of trees. Trees are going dormant at this time, and are less likely to get a disease. Because trees are slowing growth in the fall, it’s not an ideal time to plant a new tree, as the roots may have trouble getting established.

Deep-clean the kitchen. Take a day to tackle some of the more labor-intensive cleaning tasks, and keep your kitchen working efficiently and looking great:
- Degrease the range hood and filter.
- Clean the oven.
- Clean light fixtures.
- Wash the garbage can and recycling bins.
- Clean small appliances.
Add weather stripping. Weather stripping applied around the frames of windows and doors helps boost winter warmth and cut energy costs. Add door sweeps to the base of drafty doors to keep heat in and cold air out. If you’re feeling crafty, you can even make your own cozy draft stopper from an old flannel shirt, wool sweater or fleece blanket.

Clean dryer vents. Lint buildup in dryer vents can make your dryer work less efficiently and even cause a fire — cool, dry fall weather increases static electricity, which can ignite lint that has built up, so now is a key time to get that lint out. You can hire a duct cleaning specialist to clean the vents for you, or clean the vent yourself. If you decide to do it yourself:

Maintenance to Budget for This Month

Make exterior repairs. Take a walk around your property, looking for signs of damage to the roof, siding and foundation. If you spot anything that needs repair, schedule it before winter weather hits.

Clean gutters and downspouts. Once most of the leaves have fallen, clean out gutters and downspouts (hire a helper if you are not comfortable on a ladder). Clogged gutters during rainstorms can cause water to pool and damage your roof or siding.

Conduct an energy audit. A trained auditor can assess your home’s current energy efficiency and give you a list of recommended improvements you can make, which may include upgrading to Energy Star appliances, adding insulation to the attic or beefing up weather stripping. You can also find instructions for a do-it-yourself energy audit at Energy.gov.

Schedule a chimney cleaning and heating system maintenance. Making sure your chimney and furnace or boiler are cleaned, maintained and in working order before you need to turn on the heat is an important safety measure. And be sure to add a chimney cap if you don’t already have one — it will stop critters from crawling down your chimney!
October 2, 2017
How to Make Smart Home Renovations

For a good ROI on your house consider this advice from the Canadian Appraisal Institute on how to make smart home renovations. It’s been said before: We are the generation of renovation. Ask any friend and I bet my lunch that almost all of them have either done or will be doing a renovation.

There are two main reasons for renovating. The first is to improve your current home, based on your own personal needs (not wants, needs). This is the primary reason to justify expensive projects, such as adding a second-story addition, finishing the basement, or extending the kitchen. It’s a renovation that will require a lot of work, money, and inconvenience, but will allow you and your family to enjoy the home more fully in the up-coming years.

The second reason people use to justify a renovation is that they are adding value to their home. This is a problem. Evidence shows that it’s a lot easier to justify spending money if you think you’re getting a rebate and convincing yourself that your $15,000 bathroom remodel will add $20,000 in value to your home is the psychological version of a rebate. The big problem with this is that people will then use these mental gymnastics to justify financing a renovation—and take on debt today, in order to increase your home’s value tomorrow is not financially savvy.

For those savvy enough to understand that a home renovation isn’t an investment, here’s a few tips on how to plan a smart renovation. According to the Appraisal Institute of Canada (AIC) homeowners should follow these 4 general tips when renovating:

#1. Choose improvements with long life expectancy

These are the less-than-sexy remodel jobs, such as new roofing (every 15 to 25 years for asphalt tile), a new furnace (every 10 to 15 years), or a new A/C unit (every 10 to 15 years). These improvements can offer savings in the year of renovation and in the years to come. For instance, replacing all the windows in your home could cost $10,000 or more, but the AIC estimates that this renovation will provide a return on investment (ROI) between 50% and 75%. Since outdated or improperly working windows and doors are major contributors to a home’s energy loss—up to 20% by some estimates—repairing or replacing these features will provide immediate savings and will add value to your home.

#2. Invest in modern updates, particularly in high traffic areas

The kitchen and bathrooms are key areas that hold their value if the finishes are contemporary and neutral. However, an entire renovation isn’t always required. For instance, wooden kitchen cabinets can be easily updated by resurfacing the doors and changing the hardware. You can also modernize and update the look of your kitchen by changing the countertop and replacing lighting and plumbing fixtures.

However, if your kitchen or bathroom layout just doesn’t work or your cabinets are beyond the point of resurfacing, it may be time to consider a full renovation. According to the AIC, you can expect a 75% to 100% ROI on a major kitchen remodel or extension.

But I need to point out that even the most well-thought out and contemporary remodel today will look dated in 15 years, so don’t bank on a dollar-for-dollar return on your remodel budget if you don’t plan on selling for a few decades. Still, if you’re renovating with your own family in mind, you can develop a smart plan by asking for features that are easy to update when it comes time to sell. A good designer and contractor can easily help in this situation.

#3. Don’t overlook (or underestimate) the more inexpensive remodel jobs

The return on investment for a fresh coat of paint is up to 165%—the best ROI of any home improvement. Other smaller remodel updates that don’t break the bank include replacing the front door, updating the home’s lighting fixtures, and adding (or rejuvenating) landscaping.

Inexpensive remodel jobs aren’t isolated to a few fixtures, either. Removing carpet and installing hardwood goes a long way to increasing your home’s appeal to potential buyers and according to the AIC, the ROI on floor upgrades ranges from 50% to 75%. That means if you spend $5,000 redoing your floors, you can expect to recoup anywhere from $2,500 to $3,800 of your costs.

#4. Consider energy efficiency

According to a variety of appraisal sources, energy efficient renovations are considered to have one of the highest paybacks, relative to cost.

Percentage recovered upon resale:

Kitchen upgrade: 75% – 100%
Bathroom upgrade: 75% – 100%
Interior painting: 50% – 100%
Roof replacement: 50% – 80%
Replace furnace/heating system: 50% – 80%
Expansions (addition of rooms): 50% – 75%
Doors and windows: 50% – 75%
Deck: 50% – 75%
Installation of hardwood floor: 50% – 75%
Construction of a garage: 50% – 75%
Fireplace (wood or gas): 50% – 75%
Central air conditioning: 50% – 75%
Finished basement: 50% – 75%
Wood fence: 25% – 50%
Cement driveway: 25% – 50%
Landscaping: 25% – 50%
Pool: 10% – 40%
Skylights: 0% – 25%

August 1, 2017

Credit Reporting 101

Your credit file contains information on all of your credit accounts submitted to the credit bureaus, including balances, limits, payment history, etc…, as well as identification information such as your name, address, age, social insurance number, marital status, spouse’s name and age, number of dependents, occupation, and employment history.

What is a credit score?

In Canada, credit scores range from 300 up to 900 points, which is the best score you can have. According to TransUnion, 650 is the magic middle number – a score above 650 will likely qualify you for a standard loan while a score under 650 will likely bring difficulty in receiving new credit.

Lenders who pull your credit bureau file may see a slightly different number than you see when you pull your own file. This is due to the fact that each creditor applies a specific set of risk rules, giving and taking points for different purposes or preferences. This proprietary method of scoring will make a difference in the final calculation. The score you pull for yourself is calculated using an algorithm created for consumers that approximates these different formulas, and should still be in the same numerical range as the lenders’ scores.

How long is information kept on my credit file?

Actual inquiries made by credit grantors	minimum of 2 years, however it may only affect you credit for the last 12 months
Credit history and banking information	6 years from the last activity date
Bankruptcies	6 years from the date of discharge (1^st bankruptcy)
Judgments, foreclosures, garnishments	6 years from the date filed
Collections	6 years from the date of last activity
Secured loans	6 years from the date filed
Credit counselling, consumer proposals, orderly payment of debt (OPD)	3 years from the date settled or completed

How can a low credit rating affect my life?

Credit scoring is used by lenders, insurers, landlords, employers, and utility companies to evaluate your credit behaviour and assess your creditworthiness.

1. Applying for a loan. Your credit score will be a big factor into the decision of whether you are approved or denied your application for more credit. Your credit score will also affect the interest rate and credit limit offered to you by the new credit grantor – the lower your credit score, the higher the interest rate will be and the lower the credit limit offered – the reason for this is you are considered more of a credit risk.

2. Applying for a job. A potential employer may ask your permission to check your credit file and based on what they read, they may decide not to hire you due to your poor credit history. Yes, having bad credit could cost you a job!

3. Renting a vehicle. When you sign an application to rent a car, the rental company can check your credit history to determine what their risk may be when they loan you their property. So although you are not applying for credit, the application documents you sign provide your written permission to access your credit information.

4. The same is true when applying for rental housing – the landlord may assess your tenant worthiness and their risk by factoring in your credit rating and score, and they could pass you over for someone with a better credit rating.

What information is used to calculate my credit score, and what factors will lower my score?

If you have tried looking on the consumer reporting agencies’ websites, you have seen they provide very little information as to how your credit score is calculated. They believe this information is proprietary and therefore their ‘secret’. They do, however, provide a list of the main factors which affect your credit score:

1. Payment History
Equifax says: “Pay all of your bills on time. Paying late, or having your account sent to a collection agency has a negative impact on your credit score.”
TransUnion says: “A good record of on-time payments will help boost your credit score.”

2. Delinquencies
Equifax lists: “Serious delinquency; Serious delinquency, and public record or collection field; Time since delinquency is too recent or unknown; Level of delinquency on accounts is too high; Number of accounts with delinquency is too high.”
TransUnion lists: “Severity and frequency of derogatory credit information such as bankruptcies, charge-offs, and collections.”

3. Balance-to-Limit Ratio
Equifax says: “Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit may also help your score.”
TransUnion says: “Balances above 50% of your credit limits will harm your credit. Aim for balances under 30%.”

Ok, so avoid maxing out your credit – because if you don’t really need more credit you’ll be able to get it, and if you do really need it then you are more of a risk.

4. Recent Inquiries
Equifax says: “Avoid applying for credit unless you have a genuine need for a new account. Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties, or overextending yourself by taking on more debt than you can actually repay. A flurry of inquiries will prompt most lenders to ask you why.”
TransUnion says: “Avoid excessive inquiries. When a lender or business checks your credit, it causes a hard inquiry to your credit file. Apply for new credit in moderation.”

There are two types of Credit Bureau file inquires: “hard inquiries” such as an application for new credit, which will lower your score; and “soft inquiries” such as requesting your own credit report, and businesses checking your file for updates to your existing credit accounts for approving credit limit increases, for example – these will not appear on your file or lower your credit score. So be careful to only apply for credit you really need.

5. Length/History of Accounts
Equifax says: A “common negative score factor… [is the] length of time accounts has been established is too short”
TransUnion says: An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.”

Having a longer history on your credit accounts earns you more points, so avoid closing your accounts if you may need them in the future. A good credit history is built over time – sorry, but there is no quick fix for this one.

6. Variety of Credit Accounts
TransUnion says: “A healthy credit profile has a balanced mix of credit accounts and loans.”

Having a mix of credit products (credit card, retail store card, line of credit, car loan, etc…) will procure more points on your file than having only one type of credit, such as only credit cards.

7. Too Many Accounts
Having a lot credit accounts, especially if many of them carry balances, is another warning sign of financial distress, so if the Credit Bureaus think you have too many, they will deduct points.

Other “derogatory” factors which negatively affect your credit rating and the Credit Bureaus don’t like to mention to you are:

1. Errors
One of the major causes of point loss to your credit rating are bureau reporting errors. Errors can be delinquent accounts reporting on your file that do not belong to you, late payments that were not late, and credit that is created from identity fraud – therefore not your credit. The Credit Bureaus are paid by the creditors who pull credit bureau files and in turn who report to them. Credit reporting is done electronically, and Credit Bureaus accept the information they are sent without any investigation into the accuracy of the information. Therefore, is it critical that you pull your credit bureau file at least once a year. Only you will know when there is an error on your file, and it is up to you to have the credit bureaus fix it.

Look for these common errors:

Wrong mailing addresses
Incorrect Social Insurance Number
Signs of identity theft
Errors in your credit accounts
Late payments
Unauthorized hard inquiries

If there is an error on your file you must contact the Credit Bureau, then it is up to the Bureau to investigate your complaint and to verify the information contained in your file by contacting the reporting creditor. When contacted by the Credit Bureau, the reporting creditor will have to verify the item they have placed on your file. You are entitled to be part of that process. Check your credit again 30-60 days after disputing errors. If any of the disputed inaccuracies remain, contact the creditor to further your dispute and determine if the item can be taken off your credit profile.

2. Moving/Time at Address
As previously discussed, a large number of credit file requests within a short period due to moving will lower your credit score. But on top of that, the length of time at your current address will influence your score, so try not to move a lot as it will affect your credit rating. The longer you remain at one address, the more points you receive.

3. Changing Employment Frequently
The longer you stay at a job, the higher points your credit score receives. You are seen as having a secure job and therefore being a secure, less risky credit consumer.

4. Having No Mortgage or Housing Information
The Credit Bureaus assign certain points for those who have mortgages and those who rent, and deduct points for those whose housing situation is unknown to them. As soon as you pay off your mortgage, the reporting account is removed from your file and you are in the unknown category, which will actually remove points from your credit rating! Credit card and other credit account history will remain on your account even after being paid off and closed, but unfortunately a paid mortgage does not benefit your credit rating. Imagine, you own your own home and that does not benefit your credit rating – does that even make sense? Also, not all mortgages report to the Credit Bureaus.

5. Having High Revolving Credit Balances
When you have high balances that are rotating between different credit accounts, this is a warning sign that you could be in financial trouble and therefore you could be considered a credit risk.

6. Having No Debt
Believe it or not, having no debt is also bad for your credit score! Here we go again – if you don’t need to borrow money creditors will be trying to throw it at you. If you do need to borrow money and have no debt or debt history well, you will have a harder time of it. If you do not have a history of credit use on your file to provide something for creditors to evaluate, they will see that as a risk, and you will be deducted points on your score for not having credit accounts.

Tips to Raise Your Credit Score

1. Correct errors, and track your report for future errors. Order your credit file from each bureau at least once per year.

2. Lower your balances. If your debt levels are above 50% of your available limit, create a payment plan to reduce your balances.

3. The biggest “tip” to having a good credit rating and a high credit score is to continually use credit and to repay that credit on time all the time. Set up automatic payments to help with this.

4. If you have no credit history, or need to rebuild your credit, open a secured credit card account. You pay a deposit, which sets the limit of your card, then use it like a regular credit card. The secured credit card provider reports your payment habits to the credit bureau(s), so you will be able to gain points with an account in good standing.

5. Look over our list, read your credit report, and identify any areas that could be improved for a higher credit rating.
Remember, “your credit rating is not a reflection of your personal worth – it is merely a credit reporting tool” – Margaret H. Johnson. The good news is your credit rating is like your self-esteem, sometimes in your life it will be high and sometimes it will be low – however, you can always rebuild it over time!

~ Adapted from Debt Canada

July 6, 2017

Top 10 Resume Mistakes to Avoid

Aren’t sure what to put on your resume? Make sure you don’t include any of these common errors. It’s deceptively easy to make mistakes on your resume and exceptionally difficult to repair the damage once an employer gets it. Therefore, prevention is critical, whether you’re writing your first resume or revising it for a mid-career job search. Check out how to write the perfect resume by following these top 10 resume mistakes to avoid.

1. Typos & Grammatical Errors

Your resume needs to be grammatically perfect. If it isn’t, employers will read between the lines and draw not-so-flattering conclusions about you, like: “This person can’t write,” or “This person obviously doesn’t care.”

2. Lack of Specifics

Employers need to understand what you’ve done and accomplished. For example:

A. Worked with employees in a restaurant setting.
B. Recruited, hired, trained and supervised more than 20 employees in a restaurant with $2 million in annual sales.

Both of these phrases could describe the same person, but the details and specifics in example B will more likely grab an employer’s attention.

3. Attempting the “One–size–fits–all” Approach

Whenever you try to develop a one-size-fits-all resume to send to all employers, you almost always end up with something employers will toss in the recycle bin. Employers want you to write a resume specifically for them. They expect you to clearly show how and why you fit the position in a specific organization.

4. Highlighting Duties Instead of Accomplishments

It’s easy to slip into a mode where you simply start listing job duties on your resume. For example:

Attended group meetings and recorded minutes;
Worked with children in a day-care setting;
Updated departmental files.

Employers, however, don’t care so much about what you’ve done as what you’ve accomplished in your various activities. They’re looking for statements more like these:

Used laptop computer to record weekly meeting minutes and compiled them in a Microsoft Word-based file for future organizational reference.
Developed three daily activities for preschool-age children and prepared them for a 10-minute holiday program performance.
Reorganized 10 years worth of unwieldy files, making them easily accessible to department members.

5. Too Long or Too Short

Despite what you may read or hear, there are no real rules governing resume length. Why? Simply, because human beings who have different preferences and expectations where resumes are concerned, will be reading it. That doesn’t mean you should start sending out five-page resumes, of course. Generally speaking, you usually need to limit yourself to a maximum of two pages. But don’t feel you have to use two pages if one will do. Conversely, don’t cut the meat out of your resume simply to make it conform to an arbitrary one-page standard.

6. A Bad Objective

Employers do read your resume objective, but too often they plow through vague pufferies like, “Seeking a challenging position that offers professional growth.” Give employers something specific and, more importantly, something that focuses on their needs as well as your own. Example: “A challenging entry-level marketing position that allows me to contribute my skills and experience in fund-raising for non-profits.”

7. No Action Verbs

Avoid using phrases like “responsible for.” Instead, use action verbs: “Resolved user questions as part of an IT help desk, serving 4,000 students and staff.”

8. Omitting Important Information

You may be tempted, for example, to eliminate mention of the jobs you’ve taken to earn extra money for school. Typically, however, the soft skills you’ve gained from these experiences (e.g., work ethic, time management) are more important to employers than you might think.

9. Visually Too Busy

If your resume is wall-to-wall text featuring five different fonts, it will most likely give the employer a headache. So show your resume to several other people before sending it out. Do they find it visually attractive? If what you have is hard on the eyes, revise.

10. Incorrect Contact Information

I once worked with a student whose resume seemed incredibly strong, but he wasn’t getting any bites from employers. So one day, I jokingly asked him if the phone number he’d listed on his resume was correct. It wasn’t. Once he changed it, he started getting the calls he’d been expecting. Moral of the story: double-check even the most minute, taken-for-granted details.

June 1, 2017
How to Create a Budget
A budget is a plan, an outline of your future income and expenses that you can use as a guideline for spending and saving. Only 47% of Canadians use a budget to plan their spending. But Canadians are feeling more in debt than ever with 90% saying they have more debt today than five years ago. A budget can help you pay your bills on time, cover unexpected emergencies, and reach your financial goals — now and in the future. Most of the information you need is already at your fingertips and the guidelines below will show you how to create a budget.

Setting Up a Monthly Budget

It’s a good exercise to document your own actual spending habits for a month or two, and then compare them to this model. This can be a quick way to find out if you are overspending in certain areas.

STEP 1: Calculate Your Income
To set a monthly budget, you need to determine how much income you have. Make sure you include all sources of income such as salaries, interest, pension, and any other income sources, including a spouse’s income if you’re married. Determine your pay after deductions, and then use the following chart to help figure out what your monthly take-home pay is:
- Weekly cheques, multiply by 4.333
- Every-two-week cheques, multiply by 2.167
- Twice-a-month cheques, multiply by 2
- Irregular annual income, divide the net total by 12
You also want to make sure you add in other sources of income, such as interest income, spousal support, child support, tenant rent, and other payments. As with your pay cheques, determine a monthly average for these streams. Using the downloadable Budget Worksheet, write a dollar figure next to each relevant income source. Make sure that the figure you write down is the amount you receive from each income source on a monthly basis.

STEP 2: Estimate Your Expenses
The best way to do this is to keep track of how much you spend each month. The first step is to sum up just where (and how much) you think you are spending. The Expense Worksheet divides spending into fixed and flexible expenses. If some of your expenses for one or more category change significantly each month, take a three-month average for your total. As for the other categories, you might prefer to split them into more narrow subgroups separating food, clothing, and entertainment, for example.

STEP 3: Figure Out the Difference
Once you’ve totalled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference. A positive number indicates that you’re spending less than you earn – congratulations! A negative number indicates that your expenses are greater than your income and gives you an idea of where you need to trim expenses and by how much.

Well done! You’ve created a budget. The next step is to make adjustments to this outline in order to achieve your financial goals. Track your budget over time to make sure you’re on track. You need to start making records of your actual income and expenses. This information will help you to understand any “budget variances” – the difference between the amount you planned to spend in a certain category, and the amount you actually spent. Prepare to be surprised for the first couple of months. You may not need to track your spending indefinitely. Usually, a couple of months are all you need to get an idea of where your money is going.

Helpful Tip

The 50/20/30 Rule
When creating a budget, you can list each and every monthly expense you incur as its own line item, or you can combine some of your expenses and follow what’s known as the 50/20/30 rule. The benefit of the 50/20/30 rule is that it groups certain expenses together to make your budget easier to track. The 50/20/30 rule splits your living expenses into three main categories:
1. Fixed costs that stay the same month after month, such as your mortgage, car payment, and cable bill, should take up 50% of your income.
2. Variable costs that can change from month to month, such as entertainment, groceries, and clothing, should take up 30% of your income.
3. Savings, which should take up 20% of your income.
The 50/20/30 rule allows you to retain some flexibility in your budget while saving a nice percentage of your income. While you can always adjust these percentages to accommodate your circumstances, limiting your fixed costs to 50% of your income should leave you with enough money left over to save and cover your variable expenses. Along these lines, allocating 30% of your income to variable costs means you’ll have a decent amount of wiggle room within that category alone.
May 1, 2017
What to Do With Your Tax Refund
Another tax season is behind you – it’s time to relax, sit back, and wait for that return. The average Canadian is entitled to a refund, according to Canada Revenue Agency, with the average refund for last year’s income tax totaling $1,580. Before you splurge, however, let’s take at a look at the benefits of saving your tax refund and putting it to better use. Here are our top tips for what to do with your tax refund:
1. Stop treating your return like found money
Although most Canadians are happy to receive a tax refund, there’s very little reason for celebration – you’re actually giving Canada Revenue Agency an interest-free loan. Many Canadians think of a tax refund as a bonus, even though it’s your own money to begin with. Instead of treating your tax refund like found money, it’s important to spend it prudently.
1. Pay off any outstanding bills
If you have outstanding bills, using your tax refund to pay them off is probably the best option for you. There’s nothing worse than the stress of being behind. Take this opportunity to get ahead of the game for once.
1. Pay down your credit card debt
Credit card debt can build quickly, but it’s hard to whittle down once it mounts. If you have outstanding debt on your credit cards, the responsible thing to do would be to put your tax return towards that debt. Of all the debt you have, credit card debt is most likely to have the highest interest rate running from 10% – 29%. By paying that debt down first, you’ll actually be saving money in interest later.
1. Put some of it towards your mortgage
You can’t beat the guaranteed rate of return of paying down your mortgage. If you have a mortgage that allows you to make additional payments without penalty (and most mortgages will allow you to make an annual lump sum payment of 5% – 25% of the mortgage value), this might be the perfect opportunity to use that to your advantage. The more you pay now, the less you pay in interest later.
1. Invest in your future
If you haven’t started an RRSP, maybe it’s time. Your return might not amount to much now, but over the years your investment will grow. This is a particularly good idea if you are feeling no other financial pressures at the moment. A tax return can also be the perfect way to launch an RESP for your child. Consider spending your tax refund to invest for your child’s education – a deposit to an RESP (Registered Education Savings Plan) could be eligible for 20% grant for children up to age of 18 for contributions up to $2500.
1. Start an emergency fund
Doesn’t it sometimes seem like bad things happen either when you’re least prepared or when you’re least able to cope? You just paid a huge vet bill and your washing machine suddenly dies. You finally paid off your credit card debt and your car breaks down. These situations happen all the time, and sometimes it feels like you’ll never get ahead. Without an emergency fund, situations like these can be stressful. Why not take this extra cash and set it aside for those little emergencies? When the time comes – and it will – you’ll be glad you did.
1. Upgrade your job skills
Have you recently found yourself wanting to return to school? Have you dreamt of taking courses to upgrade your skills? Will doing so help increase your salary? If you answered ‘yes’ to any of these questions, you might want to consider using your return to invest in yourself. This is an especially good idea if it will help to boost your income in the long run.
1. Treat yourself to something nice
Sometimes being responsible is all we do. If you’re one of those people who seem to always be doing the right thing – saving money, paying down bills, saying no when you really want to say yes – then maybe you need to do something nice for you. Buy yourself a new outfit. Go get your hair done. Take yourself out for a nice lunch. Go golfing. Spoiling yourself is sometimes the best course of action – especially if it’s something you don’t often do.
March 31, 2017
5 Ways to Pay Off Your Mortgage Faster

Purchasing a home is a major accomplishment, but with these 5 Ways to Pay Off Your Mortgage Faster, paying off your mortgage as early as possible will be the best investment you can make. Below are a few easy ways you can pay off your mortgage faster:

1. Accelerated bi-weekly payments
Instead of paying your mortgage on a monthly basis 12 times per year, pay your mortgage every two weeks for a total of 26 payments each year.

Example: A $300,000 mortgage paid on a monthly basis with a 3% interest rate over 25 years will cost you $125,920.44 in interest. However, if you increase your payment frequency to accelerated bi-weekly payments, you will shave nearly three years off of your amortization schedule, and save $16,058.57 in interest.

2. Round up your mortgage payments
Make no mistake: Every dollar counts when it comes to paying off your mortgage. The quicker you can pay off your mortgage, the more you will save in interest. A painless way to make your mortgage disappear faster is to round up your mortgage payments. So if your accelerated bi-weekly mortgage payments are $543, consider rounding up to $600 instead. The extra $57 will do wonders to your mortgage balance and chances are you will barely notice a difference in your monthly budget. If you receive a raise, instead of increasing the cost of your lifestyle in the short term, consider throwing the extra amount you make onto your mortgage instead.

Example: Bi-weekly payments on a $230,000 mortgage with a 2.75% interest rate over 30 years would be $468.53. Increase those bi-weekly payments by just $31.47 to $500, and you’ll shave nearly six years off of the amortization schedule.

3. Put ‘found’ money towards your mortgage payments
Unexpected sources of money such as a birthday cheque from a relative or a bonus at work are considered sources of ‘found’ money. ‘Found’ money can be easily applied to your mortgage without any impact to your budget because it wasn’t money you were expecting or counting on. Consider increasing your RRSP contributions, and then put your income tax refund directly towards the principal of your mortgage.

Example: A one-time payment of $5,000 on a $250,000 mortgage at 3.75% over 30 years will decrease your mortgage amortization by over 12 months.

4. Make a lump sum anniversary payment
Most banks will allow you to make an extra mortgage payment each year, which is applied directly to the principal. Taking advantage of this by making a lump sum payment, even if it’s as small as $100 a year, is a great way to chip away at your mortgage.

Example: An annual lump sum payment of $250 on a $400,000 mortgage at 3.50% over 25 years, combined with a bi-weekly payment frequency will decrease your mortgage amortization by over 3.5 years.

5. Stay informed
Once you have a mortgage and start making your payments, it can be easy to just forget about it because it’s an automatic payment. To be an informed homeowner, you need to keep up-to-date on interest rates and new mortgage options. You could potentially save a ton of money just by understanding what your options are.

Example: Let’s say that interest rates have dropped since you took out your mortgage a few years ago, but you are in the middle of a five-year fixed term with your bank. By understanding what the penalties are for breaking your mortgage, and reapplying for a lower interest rate, you could potentially save thousands of dollars over the long run.

While paying down your mortgage early will mean less interest paid over the lifetime of the mortgage, and a shorter amortization schedule, it’s not always the best decision for every homeowner. For example, if you have high interest debt on a credit card, no emergency fund savings, or if you haven’t started saving for retirement yet, the interest you would save on your mortgage will not be as beneficial to you as dealing with other financial issues. Armed with information and commitment, these tips will help you pay off your mortgage faster. The freedom that being completely debt-free brings is a dream for many Canadians, so take the time to do some calculations and figure out what options are right for you.

March 1, 2017