November is National Financial Literacy Month, where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. This year, they’re discussing the often-looming question of housing in all its aspects: renting homes, buying homes, and managing mortgages.
November is National Financial Literacy Month, where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. This year, they’re discussing the often-looming question of housing in all its aspects: renting homes, buying homes, and managing mortgages. While it’s good to have house and home on your mind, with a little help from Magenta and the FCAC, the question of home can be more of a hope and less of a headache.
At Magenta, we aim to connect people with opportunities to build a better tomorrow. This month, we’re furthering our goal by supporting National Financial Literacy Month and sharing resources dedicated to helping Canadians:
One of the most important purchases in anyone’s life is their first home. More than just a sign of independence or financial security, a home is a place where you can truly be yourself, a reflection of your life’s journey and the journeys of those you have the pleasure of sharing it with.
In today’s market, reaching the brass ring of home ownership can feel like an impossible dream for certain groups including, new Canadians, Millennials, Gen Z and others who are looking to establish a home base. The good news is that there are many programs and incentives in place to help make that dream a reality- some of which, such as the Home Buyer’s Plan, have become more flexible with the release of the latest federal budget. There are also many tools at your disposal to help you save for the future, like:
If you or someone you know is considering renting or purchasing a home or repaying a mortgage, keep reading to learn more about navigating the world of residential finance in Canada.
Renting may be cheaper than buying in the short term. As important as the roof over your head is, spending too much on rent can make it difficult to cover your other expenses or save for the future. The FCAC suggests that your rent and household-related expenses should not consume more than 35% of your gross (before taxes and deductions) household income.
The documentation you’ll require to rent is typically less intensive than if you were to purchase the same property. However, your landlord will want to check your credit report to determine whether you can pay rent on time. If you have no credit history, be prepared to provide your landlord with a guarantor. A guarantor is someone with a good credit history who agrees to pay for you if you cannot make rent. Regardless, remember that failure to pay rent on time will hurt your credit history, impairing your ability to rent or purchase other homes in the future.
Saving to make the down payment on a home can be as simple as incorporating it into your budget. Automatic fund transfers to a savings account for each of your pay periods are a great way to start. You can consider investing your savings in a short-term strategy such as Guaranteed Investment Certificates (GICs) or low-risk mutual funds. You can make use of both your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) to help you reach your goal. Both accounts allow you to save money tax-free. Note that only TFSAs allow you to withdraw money without paying tax.
If you’re self-employed or have a poor credit history, your lender can request a larger down payment. This means they can ask for more than the mandated minimum down payment for a home of that price. However, a larger down payment can be advantageous, as your down payment is deducted from the total value of your mortgage. The bigger your initial payment, the smaller the mortgage. The smaller the mortgage, the shorter the time needed to pay it back, which could save you thousands of dollars in interest fees.
The first step in buying a home is ensuring you have the means to keep it. The Canada Mortgage and Housing Corporation (CMHC) recommends that your monthly housing costs should not exceed more than about 39% of your gross (before deductions) monthly income. These costs include your mortgage payments, property taxes and utilities. They also recommend that your entire monthly debt load should not be more than 44% of your gross monthly income. This includes mortgage payments and all other debts, such as loan or credit card payments.
Additionally, when you buy a home, you will pay for upfront costs apart from your mortgage and down payment. Examples include home inspection fees, legal fees, property tax adjustments and title insurance. As a rule of thumb, expect to spend between 1.5% and 4% of the home’s purchase price on these costs.
The Canadian federal government offers several programs and incentives to help make homeownership a reality, especially for first-time homeowners.
In all likelihood, even with these benefits, you will need to take out a mortgage to finance your purchase. If you are planning to take out a mortgage with a bank, be sure to use the FCAC’s free calculator to determine if you qualify for such a loan. If you don’t qualify for a bank loan in Canada, federal law does not require credit unions and other alternative lenders to use the same metrics. They can evaluate your eligibility differently- particularly if you are self-employed or your credit history, while damaged, is in the process of recuperating.
When you get a mortgage, your contract is in effect for a specific length of time. This is known as the mortgage term. This period can range from a few months to five years or longer. You have to renew your mortgage at the end of each term unless you pay the balance in full. If your mortgage is with a federally regulated institution, the lender must provide you with a renewal statement at least 21 days before the end of the existing term. Your lender must also notify you 21 days before the end of your term if they will not renew your mortgage.
When your mortgage is up for renewal, it’s important to consider if your current mortgage product still suits your needs. If not, then it is time to investigate other options. You can consider your current lender or a different lender entirely. If you need some assistance, a mortgage broker may be able to help you find the mortgage solution best suited to your needs.
When renewing your mortgage, ask yourself:
*Remember, extending your amortization can result in more frequent and smaller payments. It will increase the amount of interest you’ll have to pay. Consider consulting a tool such as the FCAC’s mortgage calculator to gauge how much this will cost you in the long run.
In Canada, if your lender is a federally regulated institution (e.g. a bank), they must offer and sell you products and services that are appropriate for you. This includes assessing your wants based on your circumstances and financial needs. It is worthwhile to describe your financial situation so that you can match it with the best product. Keep in mind that if you change lenders, you may have to pay setup, appraisal, and other administrative fees. These fees would be in addition to paying a new mortgage loan insurance premium if you are extending your amortization period or increasing the size of your loan.
To learn more about Financial Literacy Month and access free tools and information to improve your financial health, please visit canada.ca/money.
If you enjoyed this blog and want to learn more about Magenta or financial literacy, we invite you to check out our Resource blogs.
The opinions and viewpoints presented in this document are exclusively those of the several writers and do not represent the perspectives of any associated individuals or organizations, including but not limited to the writers’ current or former employers. This article serves purely informational purposes, and the writers have made efforts to verify the accuracy of the information and analysis. The writers take full responsibility for any opinions, forecasts, or predictions made. They do not guarantee the precision or completeness of the document’s contents. This document does not offer professional or investment advice. The writers will not be liable for any consequences resulting from reliance on this piece. Readers should consult with a certified expert before making any financial decisions.
As you approach retirement, it’s important to have a solid plan to ensure a steady income stream. This blog discusses a popular and tax-efficient option, the Registered Retirement Income Fund (RRIF). What is a RRIF? A RRIF is a tax-deferred investment account designed for individuals who have reached retirement age
As you approach retirement, it’s important to have a solid plan to ensure a steady income stream. This blog discusses a popular and tax-efficient option, the Registered Retirement Income Fund (RRIF).
A RRIF is a tax-deferred investment account designed for individuals who have reached retirement age and are seeking a steady income stream. It serves as an extension of your Registered Retirement Savings Plan (RRSP), allowing you to transfer your accumulated savings from your RRSP into a vehicle that provides regular payments while continuing to grow your investments on a tax-deferred basis.
One of the primary advantages of a RRIF is its flexibility. Unlike traditional pension plans, which often have rigid payout structures, a RRIF empowers you to tailor your income stream to your unique financial needs and lifestyle preferences. You can choose the frequency and amount of withdrawals, subject to certain minimum requirements, enabling you to strike the perfect balance between meeting your expenses and preserving your savings.
RRSPs are primarily focused on accumulating savings during your working years. The government mandates that these accounts be converted into a form of retirement income by the end of the year in which you turn 71. This is where RRIFs come into play, providing a seamless transition from the accumulation phase to the distribution phase of your retirement planning.
The conversion process is straightforward: you can transfer your RRSP holdings directly into a RRIF, typically on a tax-deferred basis. Until you start making withdrawals, you won’t incur immediate tax consequences, allowing your investments to continue growing tax-free.
The Government of Canada has established a schedule that explains the minimum amount you must withdraw from your RRIF based on your age and the value of your account at the beginning of the year. However, note that you can elect to have your RRIF payment calculated based on your spouse’s or common-law partner’s age, rather than your own. This flexibility allows you to adjust your withdrawals based on your changing financial needs and circumstances throughout retirement. It is also worth keeping in mind that withdrawals from your RRIF are subject to income tax at your marginal tax rate. You can learn more about this by speaking with your financial advisor or visiting the Canadian Revenue Agency’s (CRA) articles on the topic.
When you convert your RRSP into a RRIF, although you cannot continue to add to the account, you can continue investing in a wide range of eligible investment products. Examples of eligible investment products might include:
Whether self-directed or via a professional, this versatility allows you to maintain a well-diversified portfolio tailored to your risk tolerance, personal circumstances and investment objectives.
When it comes to receiving your RRIF payments, financial institutions typically offer a variety of options to accommodate your preferences. You can choose to receive payments in:
You can select the frequency of your payments, ranging from bi-monthly to annually. It allows you to align your income stream with your budgeting and cash flow requirements.
There are many other considerations such as spousal or common-law situations, attribution rules and rollback options, fees, and more. It is crucial to evaluate your options and consult with a professional to determine the most suitable approach for your unique circumstances.
While RRIFs are a powerful tool for generating retirement income, they should only be viewed as part of a complete retirement plan. Your holistic retirement blueprint should encompass various income sources, investment strategies, and risk management considerations.
Working closely with a qualified financial advisor allows you to develop a retirement plan that integrates your RRIF with other retirement vehicles. Examples of retirement vehicles are:
Your retirement plan should be tailored to your specific goals, risk tolerance, and lifestyle aspirations. Take some time to think ahead. It will provide you with the financial security and the peace of mind you deserve when you retire.
There are many useful sites and tools, like the Canadian government website, that can help you learn more about RRIFs so you will be prepared for conversations that will help you best manage your retirement.
For more information about Magenta Capital Corporation please visit our About page.
The opinions and viewpoints presented in this document are exclusively those of the several writers and do not represent the perspectives of any associated individuals or organizations, including but not limited to the writers’ current or former employers. This article serves purely informational purposes, and the writers have made efforts to verify the accuracy of the information and analysis. The writers take full responsibility for any opinions, forecasts, or predictions made. They do not guarantee the precision or completeness of the document’s contents. This document does not offer professional or investment advice. The writers will not be liable for any consequences resulting from reliance on this piece. Readers should consult with a certified expert before making any financial decisions.
Ever since our inception in 1994, our founder has made giving back a priority. For the past thirty years, Magenta has contributed to the communities we operate and lend in. Why Philanthropy? Progress is about more than just more- it’s about creating a more caring and just world. That’s why
Ever since our inception in 1994, our founder has made giving back a priority. For the past thirty years, Magenta has contributed to the communities we operate and lend in.
Progress is about more than just more- it’s about creating a more caring and just world. That’s why Magenta gives back to the communities we serve. Indeed, progress is achievable, when we not only believe progress is possible but are prepared to dedicate ourselves to the effort required to attain it.
Over three decades, Magenta has demonstrated this belief in our donations to organizations as diverse as:
We’re in the business of making tomorrow not an anxiety to escape, but as a gift to cherish and hand down. As a business, we build better tomorrows in many ways like:
Our CEO, Gavin Marshall, leads by example, making his company (Magenta Capital Corporation) a place where ‘Your Tomorrow Matters’ is more than a slogan. In his own words, “We all want to build a better world. To do so is how we transcend today and touch the tomorrows we shall never see.” Our CEO is someone who would not have been able to attend post-secondary education without the grants in place at the time. Therefore, the cause of access to higher education has always been close to Gavin’s heart. Gavin is:
Marshall has lent his philanthropic support to several University funds and initiatives, including the Student Centre, an International Nursing Placement, and a Philanthropic Fellowship position.
On June 12th and 13th, we participated in our inaugural Purpose Day- a day where Magenta facilitated our employees’ ability to volunteer in Ottawa and Toronto, the two cities our offices call home. For our first year, we stepped up in support of our local food banks: both the Ottawa Food Bank as well as Toronto’s Daily Bread. In Ottawa, we assisted with bringing in the summer harvest at the community farm, which will help stock the bank’s shelves with fresh produce, while in Toronto we sorted donations for distribution throughout the Greater Toronto Area. We look forward to using Purpose Day to explore future opportunities to engage with and uplift the communities we work in for many years to come!
Magenta Capital Corporation will be participating in this coming GivingTuesday on December 3, 2024. Canada Helps created GivingTuesday in 2012. Canada Helps is Canada’s foremost online destination for connecting charities to donors. It started as a simple idea: a day that encourages people to do good. The idea caught on and has grown around the world, inspiring hundreds of millions of people to give, collaborate, and celebrate generosity, with over 50 million dollars donated last year alone.
Every generation has believed in tomorrow. They wanted to build a better tomorrow for themselves and especially for their children. That’s the Magenta story. That’s why it’s important that Magenta gives back. Our team is committed to making meaningful contributions and aspiring to do more for our customers and our communities.
Early on in your journey into alternative investment options, you likely came across the term Mortgage Investment Corporation (MIC). MICs have entered the spotlight in recent years as a key piece in both the wealth accumulation and the wealth preservation strategies of a variety of investors. This surge in popularity can be
Early on in your journey into alternative investment options, you likely came across the term Mortgage Investment Corporation (MIC). MICs have entered the spotlight in recent years as a key piece in both the wealth accumulation and the wealth preservation strategies of a variety of investors. This surge in popularity can be credited to the many advantages this investment format has to offer, such as reduced risk through diversification, as well as strong and reliable rates of return.
Choosing which MIC is right for you is not as simple as who has the highest Return on Investment (ROI).
Here are five factors to consider when deciding to invest in a MIC:
Read the subscription agreement closely to see how quickly you can withdraw your investment. No one wants to be in a situation where they need access to capital but are stuck in a long waiting period to withdraw an investment- and some MICs will only allow redemptions once per year.
Ask for information on the actual ROI vs. target ROI of the past 5-10 years. This will give you a sense of how accurate the MIC is at estimating ROI and indicate if the MIC can consistently meet or exceed target ROIs. While macroeconomic factors such as the Bank of Canada rate directly affect MIC ROIs, it’s still vital to look for trends in the data to determine the growth trajectory of a MIC.
Learn which housing markets you are investing in and what types of mortgages your money is financing. The specific housing markets and types of mortgages that compose a MIC’s portfolio, whether urban or rural, first mortgage loans or second mortgage loans, are important factors that go into how a MIC determines interest rates and subsequently the potential pitfalls associated with an investment. You should find a MIC whose acceptable level of risk matches your own.
Ask when and how dividends are distributed, especially if you plan to reinvest the dividend in the MIC, as the investment is compounded based on a predetermined schedule. Not all MICs issue dividends on the same schedule, some issue monthly, some quarterly, and others annually.
Prudent investors keep tabs on their investments, and prudent MICs know that the best questions are the ones shareholders shouldn’t have to ask. Check to see not only that the MIC reports with clarity and regularity, but that they can handle ad hoc requests for information. You never know when you’ll need to be able to access relevant details related to your investment at a moment’s notice. Your prospective MIC should have an investor relations manager ready to answer questions, provide additional information, or help you understand the product.
Since 1994, our goal at Magenta has been to empower our investors to build for their tomorrows and achieve peace of mind. Magenta has delivered strong returns and reliable income to our investors while safeguarding capital by applying a risk-mitigated portfolio strategy. The portfolio is constructed of residential, primarily first mortgages located exclusively in carefully selected Ontario markets.
Investing with Magenta offers:
Gavin Marshall, Magenta’s Founder & CEO, is also the leader of the Campaign for Momentous Change at Trent University. Gavin gifted $207,000 to Trent University with a significant portion supporting Nursing students who travel to remote villages in Central America to support vulnerable populations through health promotion and nursing education.
Gavin Marshall, Magenta’s Founder & CEO, is also the leader of the Campaign for Momentous Change at Trent University. Gavin gifted $207,000 to Trent University with a significant portion supporting Nursing students who travel to remote villages in Central America to support vulnerable populations through health promotion and nursing education. This most recent gift brings Gavin and his wife, Susan Marshall, to $1 million in lifetime gifts. To learn more about Gavin’s involvement with Trent University, please visit: https://www.trentu.ca/news/story/36605.
At Magenta, our goal is to create a work environment where everyone feels welcomed, valued and supported to thrive in their careers and reach their professional goals. We are proud to share that our Senior Leadership team is comprised of 43% women and that women make up around 68% of
At Magenta, our goal is to create a work environment where everyone feels welcomed, valued and supported to thrive in their careers and reach their professional goals. We are proud to share that our Senior Leadership team is comprised of 43% women and that women make up around 68% of our employees.
This year, we are pursuing our first ever Women in Mortgages campaign! We encourage you to keep an eye on our social media channels and upcoming blogs to learn more about how we are contributing to uplifting women within the mortgage industry. As part of this initiative, we will be a silver sponsor at CMP’s (Canadian Mortgage Professional) Women in Mortgage Summit! On June 1st, CMP is hosting their inaugural event to amplify the careers of women within the mortgage industry through panel discussions, keynote speakers and fireside chats to create dialogue around some of our industry’s most pressing issues and discuss potential solutions.
We believe in celebrating the positive impact women at Magenta have had on the company and our industry. We want to lead by example in hopes that our peers feel inspired to pursue their own initiatives and recognize the phenomenal contributions of women on their own teams. We strive to leverage diverse perspectives to achieve our corporate goals and find actionable ways to support the women within the mortgage industry, whether they are new or seasoned in their careers.
When presented with the Women in Mortgage Summit sponsorship opportunity, Our Chief Operating Officer, Greg Sinclair, confirmed that supporting this campaign was an easy decision: “Quite simply, Magenta would not be what it is today without the strong women that have contributed and continue to contribute to the Magenta story. By sponsoring this event we get to support the continued growth of women in mortgages and celebrate their accomplishments.” Studies have shown that when men are deliberately engaged in gender inclusion programs, 96% of organizations see progress.
CMP’s event provides us with an opportunity to highlight our female broker network and what they have accomplished. This event also allows us to acknowledge the challenges faced by women in the mortgage industry. We are thrilled to be a key sponsor for an event designed to break down barriers and level the playing field for long-term success because her tomorrow matters.
At Magenta, we create a culture that exhibits allyship and provides a safe space for people to express ideas, feelings, challenges, and opportunities regardless of gender, race, orientation, or background. We’re at our best when we collaborate and leverage the diverse perspectives and knowledge of our team. If we limit any one person’s ideas, we’re limiting ourselves.
Our Founder & CEO firmly believes that “we find the best people and hire them. [He] believe[s] passionately in equality of opportunity.”
We create collaborative teams and encourage our employees to commend work well done while respectfully challenging one another to produce the best possible results. To achieve this goal, we first acknowledge that everyone has unconscious biases.
Unconscious bias is sneaky and affects our day-to-day interactions and decision- making. Even those with the best intentions can be swayed by assumptions shaped by external factors like the media or life experiences without knowing it. To overcome unconscious bias and be true allies, we should accept that we all have biases, listen carefully to the individual perspectives of others, make informed decisions, and recognize the influences in our own backgrounds, both personally and professionally, that may have given us advantages that weren’t available to others. The end goal is to ensure that everyone, regardless of who they are, has equal opportunities to contribute and succeed in the workplace.
Here are some actionable items we try to exhibit in our day-to-day:
Listen. Don’t just hear: Listen carefully to what your colleagues are saying, and asking for, in order to properly address what they want or need.
Prepare and be informed: Before presenting to your team, or leading large group discussions, prepare with colleagues and talk about the approach you’d like to take. It will help you recognize and unlearn unconscious biases. It will also give you the opportunity to recognize intersectionality within your team.
Respect your colleagues’ time: No one likes to be told what to do. No matter their position in the organization, they have commitments, and they need to deliver on them. Ask them how you can support them to achieve what needs to be done.
Communicate clearly: Don’t assume that what you know is what your colleagues know. Explain and share your rationale without being condescending.
Uplift your colleagues: Find opportunities for everyone to be acknowledged through forms of recognition, promotions or highlighting them in other ways.
We are committed to recognizing women in mortgages throughout the year. We encourage our broker community and industry partners to engage with us on our social channels and share how they acknowledge and celebrate women in our industry, because #hertomorrowmatters.
For more information on CMP’s event, please visit: https://womeninmortgage.ca.