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.
The Canadian Federal Budget 2024 has arrived, bringing a host of new policies, tax adjustments, and funding allocations aimed at addressing the nation’s economic opportunities and challenges. In this article, we break down the key elements of the budget to help you understand its implications, especially as they pertain to
The Canadian Federal Budget 2024 has arrived, bringing a host of new policies, tax adjustments, and funding allocations aimed at addressing the nation’s economic opportunities and challenges. In this article, we break down the key elements of the budget to help you understand its implications, especially as they pertain to Magenta investors.
Government policies can often be overwhelming, filled with complex details and a laundry list of exemptions and policies. It can be challenging at times to find what is and is not relevant to your day-to-day life. Our summary focuses on the most relevant points to make it easier for you to grasp what matters most to your financial decisions. Before making important financial decisions, use this article as a starting point to better understand the budget and to engage in informed discussions with your financial advisors.
To reduce the appeal of real estate as a class of speculative asset, the federal government will be increasing the capital gains tax on June 25th with a view toward driving down the cost of housing. To break this down further, whenever you sell an asset or investment for more than you paid for it, that difference is a capital gain. Conversely, when you sell an asset for less than you paid for it, this is a capital loss. These assets or investments could take the form of:
As an individual, the changes coming into effect on June 25th only apply if you stand to make more than $250,000 in a single year from capital gains (after taking into consideration capital losses)- up to that point, you will still pay the current capital gains tax of 50%. It is only for capital gains over $250,000 that the 66.67% rate comes into effect. On the other hand, all capital gains made by a corporation or trust will be taxed at the new rate of 66.67%.
You can take many steps to manage your finances when it relates to the 66.67% rate. For instance, income earned and funds withdrawn from a Tax-free Savings Account (TFSA) are not subject to the capital gains tax but do have strict annual contribution limits. Capital gains income placed in a Registered Retirement Savings Plan (RRSP) is not taxed until the funds are withdrawn, at which point they are taxed at your marginal tax rate. Your Magenta shares are both TFSA and RRSP eligible.
The federal government taxes based on your net capital gains, rather than your gross capital gains. Knowing when to sell an underperforming asset or investment for less than you paid for it (thus creating a capital loss) can be a great long-term strategy to keep your annual capital gains within a favourable tax bracket. This provided that the mitigation in potential additional taxes is greater than the immediate loss.
Capital gains related to the sale of qualified small business corporation shares or qualified farm or fishing property are considered tax-exempt up to a limit of one’s lifetime capital gains exemption (LCGE). As a Canadian, your LCGE will increase from $1,016,836 to $1.25 million on June 25th, alleviating capital gains taxation for those specific investment classes.
As a Canadian, your marginal effective tax rate (METR) is 14.5%, which is the lowest among all G7 counties. The international Organisation for Economic Co-operation and Development (OECD) calculates your METR. This calculation takes your federal and provincial income tax rates and combines them with the effective tax rate from government benefits, credits and tax deductions that are dependent on your income.
Canada’s inflation rate has decreased from 8.1% in June 2022 to 2.8% in February 2024. The introduction of the Canadian Entrepreneurs’ Incentive, offering a lower capital gains tax rate of 33.3% up to $2 million in lifetime capital gains from selling small business shares, positions Canada as an attractive destination for business growth and investment.
There have been many changes to the Canadian Mortgage Charter, namely:
This will allow younger Canadians and Muslim Canadians to participate in the housing market like never before- adding two untapped demographics of borrowers to Magenta’s diverse portfolio.
For more information on the federal budget, please visit the Government of Canada website.
For more information on investing in Magenta shares, please reach out to us.
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.
In today’s digital age, protecting your financial identity is vital. With the launch of our online broker and investor portals, we want to ensure you are following digital safety best practices around identity theft and financial fraud. Our Broker Portal is an integral part of our delivering fast, flexible, and
In today’s digital age, protecting your financial identity is vital. With the launch of our online broker and investor portals, we want to ensure you are following digital safety best practices around identity theft and financial fraud.
Our Broker Portal is an integral part of our delivering fast, flexible, and easy mortgage solutions for our brokers servicing the needs of alternative borrowers.
Our Investor Portal serves as a convenience feature for our investors never wavering on our commitment to personalized service.
Scroll down to learn more about how you can explore our customer portals while ensuring you are safe with your information.
Protecting your identity starts with securing your digital presence. Your online accounts, especially those related to financial services, are prime targets for cybercriminals. The security of these accounts heavily relies on the strength and secrecy of your passwords.
Passwords serve as keys to your digital life. They grant access to your email accounts, social media profiles, online banking services, and more. Therefore, the security of your passwords is directly tied to the security of your personal information.
Password protection is a critical aspect of online security. A strong, unique password is the first line of defence against unauthorized access to your accounts. Strong passwords keep your personal information confidential, protect your identity and ensure the security of your assets. Weak passwords are easily guessable and crackable, making them a soft target for cybercriminals. They can lead to unauthorized access to your accounts, identity theft, financial loss, and even damage to your reputation.
Click here to access the Broker Portal.
Click here to access the Investor Portal.
Disclaimer: 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 writer’s current or former employers. Efforts have been made to verify the accuracy of the information and analysis provided, but it is intended purely for informational purposes. The writers alone are responsible for any opinions, forecasts, or predictions made. No guarantees are made regarding the precision or completeness of this document’s contents. This document is not intended to offer professional or investment advice. The writers are not liable for any consequences resulting from reliance on this piece. It is advised that readers consult with a certified expert before making any financial decisions.
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health. At
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health.
At Magenta, our goal is 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:
For the final week of Financial Literacy Month, we’ll be discussing:
The best way to protect your financial rights is to understand what rights you have in the first place. Did you know that Canadian laws and regulations help ensure that financial consumers are protected, have access to basic banking services, and are treated fairly by financial institutions? These regulations include your right to:
Understanding these regulations is the first step to ensuring you can protect your financial rights when dealing with your financial institution(s).
When it comes to paying your mortgage, banks are also expected to help consumers who are experiencing financial difficulties due to exceptional circumstances. If you are struggling to pay your mortgage, it’s important that you contact your bank to learn about the relief measures that may be available to you, such as making a special payment arrangement, converting your interest rate, and mortgage deferral programs.
In November 2023, the Liberal government released the Fall Economic Statement (FES), which detailed an initiative it calls the Canadian Mortgage Charter. This charter builds upon the existing expectations related to how financial institutions treat their borrowers. To learn more, please click here: “The New Canadian Mortgage Charter Explained“.
As a Canadian borrower, you have rights when applying for a mortgage, making prepayments, renewing your mortgage, and more. Click here to explore these topics and learn more about your financial rights as a borrower.
When dealing with financial institutions, the FCAC has compiled a list of helpful resources designed to help you understand your financial rights and responsibilities. Below, please find a list of some of these resources:
Please visit the FCAC’s “Financial rights and responsibilities” page to explore more resources available to you regarding your financial rights.
Thank you for tuning in this month with Magenta as we’ve explored the weekly themes of Financial Literacy Month. To learn more about Financial Literacy Month and see additional resources provided by the FCAC, please click here.
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health. At
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health.
At Magenta, our goal is 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:
This week we’ll be talking about optimizing your financial health, managing your money to limit financial difficulties and improving your financial situation. Money worries are the biggest source of stress for Canadians: more than work, personal health, or even relationships. Canadians can avoid this stress by adopting a handful of financial strategies and sticking to them. It’s important to keep in mind that making a budget or consolidating your debt won’t solve all of your money problems overnight, just like getting that new gym membership won’t suddenly make you a marathon runner. Improvements to your financial health, like your physical health, are incremental, the sum total of thousands of little decisions you make every day to maintain your commitment to yourself and those you rely on.
Up for the challenge? Here are a few ways to get started:
Know the Difference Between Good and Bad Debt: Debt isn’t always bad. Sometimes, taking on debt in the present can help mitigate financial problems in the future, provided that that debt is being used to create value, or to produce wealth in the long term. Depending on your location, renovating your home- thereby increasing its resale value- could be a valid reason to take on debt. Taking on a student loan in order to acquire the necessary credentials to get a better-paying job is another example of a debt that could more than pay for itself in the long run.
Make a Budget to Manage Your Money: Simply keeping track of how much you earn, spend, and save can radically change your outlook on your finances. By clarifying your financial situation, you may find it easier to set limits on your spending and live within your means, as well as feel more inclined to be proactive in looking for ways to reduce or eliminate costs.
Set up an Emergency Fund: When you have money set aside for unexpected expenses, you can handle those expenses without having to go into debt or accept high-cost loans to make up the deficit.
Avoid Debt by Saving up for Your Financial Goals: When you not only identify but commit to paper (digital or otherwise) your financial goals, you may feel more accountable when it comes to whether or not you achieve them. It can be all too easy for financial aspirations to appear impossible or abstract: when you itemize your goals with specific dollar values and time frames, it becomes easier to see how far you’ve come, and how far you’ve left to go.
Did you get all the words right? Click here to see the Crossword Answer Key.
Tune in next week to learn more about our final topic: knowing your financial rights. To learn more about Financial Literacy Month and see additional resources provided by the FCAC, please click here.
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health. At Magenta, our goal is
It’s National Financial Literacy Month (FLM), where the Financial Consumer Agency of Canada (FCAC) helps equip Canadians with practical tools and tips to manage their money in a changing world. Throughout November, the FCAC is discussing the ever-changing financial marketplace and the importance of checking up on financial health.
At Magenta, our goal is 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:
For this week’s theme, “What to do in a Financial Emergency”, we’re exploring how you can equip yourself to handle financial emergencies. Whether you’re an investor, a broker, or simply looking to refresh your financial literacy, we hope this article proves useful to you.
As much as managing debt and saving for the future can help to mitigate risk, events outside your control- from personal challenges like illness or loss of income to macroeconomic factors such as recession or rising interest rates- can still threaten your financial stability. It’s a difficult topic to grapple with, after all, no one likes to plan for the worst. But in the wise words of Benjamin Franklin, “By failing to prepare, you are preparing for failure.” He might not be on our 100$ bill in the Great White North, but we’re confident his advice still applies (and we don’t think Robert Borden minds sharing the limelight, either).
To prepare for a financial emergency, the FCAC recommends the following action plan:
You can take advantage of the action plan, free tools, and resources offered by the FCAC.
Financial emergencies can happen to anyone at any time. If you are facing financial issues, you can seek external resources to help you get through a financial emergency.
We’ve created a Financial Emergency Word Search of professionals, institutions, and trusted options you can turn to. Click on the image below to download and print a copy. Go ahead and try it out!
Did you find all the words? Click here to see the Word Search Answer Key.
The good news is, you’re not alone. Your financial institutions may be able to assist you when your financial health hits a rough patch- whether that’s through offering mortgage deferrals or mortgage relief or allowing you to skip a payment cycle on your credit card (a ‘payment holiday’). For more information on what financial lifelines are available to you in Canada, please visit the FCAC’s resource for managing your money in challenging times.