Renewing your mortgage at the end of term

It can come as a pretty surprising statistic. About 70 per cent of mortgages don’t make it to the end of the term. That means a large majority of homeowners for various reasons are ending their mortgages early. But it also means there are still a lot of people out there who will keep their mortgage until it’s time to renew. And if you’re in the second boat, you might be asking yourself what this process is going to look like, and perhaps, what should you do?
For starters, most lenders, especially the big banks will send you a renewal letter when there’s about three months left on the term. Sometimes that letter could come with six months left. Typically, the lender will offer you a rate at that time and all you’ll have to do is sign at the bottom line to roll over your mortgage.
But beware, lenders often offer a higher rate than a new client because they’re hoping the ease of renewal will keep you from seeking out a new lender and lower rate.
Before you sign, it’s always best to call a mortgage broker. A good broker will consider your situation and advise you of the best course of action.
In some cases, it may be best to just sign and roll over your mortgage. There are a few things to consider. If you decide to change lenders, you’ll basically have to go through an approval process again. That entails getting all your documents, lawyer’s fees and appraisals.

You’ll have to ask yourself, is it worth the effort to save a few basis points off your rate, or a few hundred dollars over a term to make the switch?
For some it won’t be. But, if a switch can lead to saving thousands of dollars, it would certainly be something to consider. While everyone’s situation is different, the larger the mortgage, the bigger the savings will be if you can find a lower rate.
Often, homeowners will just use a bank their parents recommend for their first mortgage. But they might find themselves not happy with the service or terms of the mortgage and may just want to switch to a different lender as the mortgage comes up for renewal.
If that’s a situation you find yourself in, you have options, and a mortgage broker can help you make the best decision.

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MoneyValue
e: contact@moneyvalue.ca
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Life Insurance - Insurable Interest Explained

Buying Life Insurance for Someone Else, What You Need to Know

People are most familiar with taking out a life insurance policy on themselves to financially provide for their family should anything happen. The benefit from your plan can go towards paying for final costs, covering education fees for your kids, or helping your surviving spouse stay financially stable. But is it possible to purchase life insurance on someone else?
The short answer is yes, you can buy life insurance on another person. The long answer is that even though it is possible there are certain criteria that must be met. Today, we’re taking a look at what you need to know about getting insurance for someone else.

The Importance of Insurable Interest

Life insurance serves the purpose of financially protecting your loved ones in the event you lose your life. The benefit your plan pays out to your chosen beneficiaries in order to help them carry on and protect their financial future without you. But if you want to purchase life insurance on another person, you must have insurable interest.
Insurable interest means that you would be financially hurt in the event the insured person dies. Simply put, you can’t just take out insurance on any random person you choose, it has to be someone who’s passing could hurt you financially.
For example, you can’t take out a policy on your unrelated elderly neighbour. The passing of a friendly neighbour will not have much of a negative financial impact than the passing of a close family member.

Life Insurance

Getting Consent

Consent is always required when taking out a life insurance policy on someone else. Getting permission is key to preventing the fraudulent act of policies being taken out without the insured knowing. But getting the potentially insured person’s permission is only the first step to beginning the process.
Insurance companies will often require the person you are looking to get insured to undergo a medical exam and take a detailed health questionnaire. If a plan doesn’t require medical exams or questionnaires the signature of the insured will often be required when issuing an insurance policy.
The one and only situation where consent and insurable interest are not required are when parents are taking out a life insurance policy on their minor children.

Who Can You Buy a Policy On?

The most common people individuals take out policies on is their spouse or partner. Both people in this instance can get a policy for themselves and make the other their beneficiary, but there is also obvious insurable interest in this situation. Either making each other a beneficiary or simply taking out a policy on each other are two equally effective ways of protecting your financial futures.
Elderly parents are another common group of people to take out a policy on. The adult children of these parents often do this in order to help cover eventual final expenses and settle any debts their parent may have had. Also, if these elderly parents often watch over their grandchildren a policy taken out on them could help cover the costs of daily child care.
Finally, business partners are another typical group of people that you may want to buy insurance for because of how valuable they may be to your company. Usually, people who decide to take out a policy on a business partner will have it equal their respective share of the company. Doing this will allow the surviving partner to buy out any heirs and keep the company moving forward under his or her control.
Key man insurance is a form of life insurance that businesses take out on an important employee, like a CEO, so if he or she passes away the benefit will help the company locate a suitable replacement. The benefit will give the company time to adjust to the loss of the person and make the next best move to help recover from any financial setbacks.

Can Policies be Taken Out Without the Insured Knowing?

This is most likely something people would see on a daytime murder mystery show, but the reality is it’s next to impossible for this situation to occur. Consent and insurable interest make it incredibly difficult for an individual to take a policy out on someone without them knowing. Also, the required medical exams that most plans and insurers put in place in this instance adds another level of security to fighting insurance fraud.

Life Insurance Explained

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Using Life Insurance for Estate Planning

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Six actively managed ETFs with upside potential

Investing in exchange-traded funds (ETFs) once meant a passive index-tracking strategy, but now there is a new generation of kids on the block.

Actively managed ETFs resemble traditional mutual funds but charge lower fees that can help to improve performance. Some of these ETFs are overseen by portfolio managers picking stocks and bonds. Other managers use computer-driven, quantitative strategies to screen for securities. Active ETFs have the potential to post market-beating returns, but there are no guarantees.

We asked three analysts for their top picks among Canadian or U.S.-listed active ETFs. Their recommendations ranged from funds investing in everything from so-called "responsible" stock investments to preferred shares and senior loans.

Daniel Straus, ETF analyst at National Bank Financial Inc., Toronto

The pick: PIMCO Monthly Income ETF (PMIF-TSX)

Management expense ratio (MER): 0.87 per cent

Income-seeking investors may want to consider this bond ETF despite a challenging rising-interest-rate environment, says Mr. Straus. This ETF, which listed last fall, is run by U.S.-based Pacific Investment Management Co. (Pimco), which has a strong record in active bond management, he said.

It is a version of a mutual fund launched in 2011. It invests in non-Canadian dollar, fixed-income securities with various maturities, and has a monthly distribution.

"The managers have proven themselves able to offer a stable income, while preserving capital through multiple-market cycles," he said. The ETF's fee is higher than bond-index ETFs, but the managers earn their keep because they also deal with complex securities, such as non-agency, mortgage-backed securities, he noted. A 2008-style financial crisis or sudden rate hike could hurt the portfolio, he said.

The pick: AGFiQ Enhanced Global ESG Factors ETF (QEF-Neo Exchange)

MER: Not available. Management fee is 0.45 per cent

Investors seeking securities that align with their personal values may want to examine this global equity ETF, which holds companies based on their environmental, social and governance (ESG) records, says Mr. Straus.

"This is still a nascent area in the world of ETF investing, but it's growing in importance, especially among younger investors."

A team at Toronto-based AGF Investments Inc. uses a quantitative strategy to screen for firms deemed to be responsible investments as opposed to focusing only on financial performance.

Launched in February, the ETF is more than 40 per cent invested in information technology and financial stocks. It owns Alphabet Inc., Siemens AG and others. The ETF's management fee is reasonable for a globally diversified portfolio, he said. A global economic downturn or geopolitical uncertainty are risks for this ETF.

Denise Davids, ETF and mutual fund analyst, Industrial Alliance Securities Inc., Toronto

The pick: BMO International Dividend ETF (ZDI-TSX)

MER: 0.44 per cent

This ETF, which invests in non-North American dividend stocks, is suitable for investors who can tolerate "a moderate amount of risk," says Ms. Davids. BMO Global Asset Management uses a quantitative approach to screen for stocks that are easily tradeable, have stable or increasing dividends over the past three years, and can provide sustainable dividend income, she said.

Financials, which represent about 25 per cent of the fund, provide the largest sector weighting. Britain, Australia and France are the biggest country positions.

The ETF's fee is attractive because it is among the lowest in its category, she noted. Risks include uncertainty surrounding Britain's withdrawal from the European Union, and normalization of monetary policy by the European Central Bank which would lead to rising interest rates, she said. "That can hurt dividend stocks."

The pick: Horizons Active Preferred Share ETF (HPR-TSX)

MER: 0.65 per cent

An actively managed ETF is a better option than a passive-index fund when it comes to investing in the more complex, preferred-share space, says Ms. Davids.

"There are various types of preferred shares, and each will perform differently depending on things like the direction of interest rates, the number of new issuances and the credit profile of the issuers."

The Horizons ETF is managed by Montreal-based Fiera Capital Corp., which has an expertise in these dividend-paying securities, she said. The ETF, which provides a monthly distribution, holds preferred shares of Canadian banks and companies, such as Enbridge Inc. and TransCanada Corp.

This ETF has returned 2.6 per cent annually over the five years ending March 31 versus 0.96 per cent for the S&P/TSX Preferred Share Index, she noted. The 0.65-per-cent fee charged is reasonable for an active ETF, she added.

Alex Bryan, ETF and mutual fund analyst at Morningstar Inc., Chicago

The pick: PIMCO Active Bond ETF (BOND-NYSE)

MER: 0.61 per cent

Yield-hungry investors may want to consider this active bond ETF because its mandate now focuses on providing monthly income, says Mr. Bryan. This ETF, which is overseen by U.S.-based Pacific Investment Management Co. (Pimco), was once run by renowned bond manager Bill Gross, who left the firm in 2014. The ETF changed its name and former total-return strategy when a new management team took over.

High yield bonds, which were once capped at 10 per cent, have risen to about 30 per cent of the ETF, Mr. Bryan said. This US$2.1-billion ETF, which charges a competitive fee versus its mutual fund peers, had a distribution yield of 3.8 per cent over the past year, he noted.

While rising interest rates are a risk to bonds, investors should still have exposure to these assets to help cushion an investment portfolio in case of a stock-market selloff, he said.

The pick: SPDR Blackstone/GSO Senior Loan ETF (SRLN-NYSE)

MER: 0.70 per cent

Investors concerned about rising interest rates may find this ETF appealing because it holds floating-rate senior loans, says Mr. Bryan. "If rates go up, investors immediately earn a higher yield on the fund."

Senior bank loans are private debt issued by financial institutions, such as banks or a syndicate of lenders, to non-investment-grade companies. Given the fact that these loans have a lot of credit risk and are not easily tradeable, an "active management approach makes more sense than an index version," he said.

In the event of a bankruptcy, however, senior bank loans must be repaid before other creditors, such as preferred and common shareholders. The ETF's fee for active management is not that much more expensive than the 0.55 per cent for the cheapest senior loan index fund, he added. The ETF also pays a monthly distribution.

SHIRLEY WON

Special to The Globe and Mail

Benefits of Using a Mortgage Professional

There are generally two ways to get a mortgage in Canada: From a bank or from a licensed mortgage professional.
While a bank only offers the products from their particular institution, licensed mortgage professionals send millions of dollars in mortgage business each year to Canada’s largest banks, credit unions, trust companies, and financial institutions; offering their clients more choice, and access to hundreds of mortgage products!

As a result, clients benefit from the trust, confidence, and security of knowing they are getting the best mortgage for their needs.
Whether you’re purchasing a home for the first time, taking out equity from your home for investment or pleasure, or your current mortgage is simply up for renewal, it’s important that you are making an educated buying decision with professional unbiased advice.

Canada's housing industry is still highly vulnerable to market instability: CMHC

TORONTO -- Canada's housing sector is facing a high degree of vulnerability to market instability for the seventh straight quarter, with Toronto, Hamilton, Vancouver and Victoria shouldering the brunt of the risks.
That's according to the Canada Mortgage and Housing Corporation, which analyzed overheating, acceleration of home prices, overvaluations and overbuilding in markets across the country in its quarterly assessment, released on Thursday.
"There is a lot of demand for existing homes relative to supply and that is why the overheating indicator is high in Vancouver, Victoria, Toronto and Hamilton," said CMHC chief economist Bob Dugan.
"We have this constraint on the supply side, but at the same time, the local economies (in Toronto and Vancouver) have been very strong, generating a lot of jobs, attracting people to live in those markets, so there has been a lot of increase in demand in these markets, but without the supply, that demand goes into house price increases."
Even though stricter regulations around uninsured mortgages from the Office of the Superintendent of Financial Institutions were in effect throughout the quarter, the CMHC report said Toronto's balance between supply and demand was not affected and the sales-to-new listings ration remained "virtually unchanged."
The OFSI rules, it said, heightened demand for more affordable housing within the city, just as the city was seeing a decline in the inventory of houses in all categories.
Dugan said there weren't any surprises CMHC found when compiling the report, but he did spot "a little bit of a softening" of market activity in Toronto and less of a "spillover" in demand from the city to neighbouring communities, including Hamilton.
However, CMHC said Calgary, Edmonton, Saskatoon and Regina had still fared much better. It assessed the cities as having moderate vulnerability because of overbuilding.
Winnipeg, Ottawa, Quebec City, Moncton, Halifax and St. John's, it said, faced even less risk, earning a low vulnerability ranking.
Montreal also fell into that category, but CMHC warned it might have to revise that assessment, given the rapid growth of house prices in some neighbourhoods.
"We just have our eye on that market to see whether price growth remains sustained and maybe spreads to more neighbourhoods within Montreal," said Dugan. "It could be enough down the road that we might have to sort of trigger a warning related to price acceleration."
The Canadian Press

Toronto-Dominion Raises Mortgage Rate in ‘Biggest Move in Years’

Toronto-Dominion Bank has lifted its posted rate for five-year fixed mortgages by 45 basis points to 5.59 percent as government bond yields touched their highest levels since 2011 this week.
“It’s a big move, the biggest move in years,” said Rob McLister, founder of RateSpy.com, a mortgage comparison website. “There’s a lot of reasons why that could be -- maybe they’re taking a position on rates going forward, which is not that typical; maybe they’re trying to get people to lock in and generate better spreads.”
Toronto-Dominion, Canada’s second-largest lender, lifted its five-year closed rate on Wednesday, along with increases to its two-year, three-year, six-year and seven-year mortgage rates, bank spokeswoman Julie Bellissimo said Thursday in an e-mailed statement.

Banks generally give homebuyers better terms than their posted rates. Canada’s big banks are charging their preferred customers with sound credit quality 3.39 percent for five-year fixed mortgages and 2.75 percent for variable mortgages this month, according to RateSpy.com. That’s little changed from late January.
Canada’s housing market is has been on a wild ride. House prices in Toronto have begun to stabilize after dropping sharply from last year’s dramatic spike, while prices in Vancouver have rebounded. Sales volumes are still down from last year however after the government introduced regulations to make mortgages more costly.

Bond Yields

“Adjusting our rates is not a decision we take lightly," Bellissimo said. “We look at a number of factors when determining rates including the competitive landscape, the cost of lending and managing risk."
Even with the change, rates “remain competitive and at historically low levels," Bellissimo said.
The change comes as the yield on five-year federal government bonds rose to 2.18 percent Wednesday, the highest in almost seven years.

Toronto-Dominion’s posted rate is now higher than rivals including Royal Bank of Canada, Bank of Nova Scotia and Bank of Montreal, which each advertise posted rates of 5.14 percent. Canadian Imperial Bank of Commerce has the lowest posted rate, at 4.99 percent.
— With assistance by Maciej Onoszko

2 Conservative Approaches To Retirement

2 Conservative Approaches To Retirement: Financial Advisors' Daily Digest

Apr. 27, 2018 10:26 AM ET

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1 comment

SA For FAs

Senior Editor, FA Content

(3,176 followers)

Summary

Laurence Kotlikoff describes a method for investing in stocks with no risk whatsoever.
Michael Lonier formulates a retirement planning system designed to squeeze out any sequence of returns risk.
Index Investing Show’s Ron DeLegge argues that an investment philosophy is essential.

In his latest Seeking Alpha column, Boston University economist Laurence Kotlikoff describes the first and last time the American Economic Association held its annual convention in Las Vegas. It’s not because the group of academics didn’t enjoy the buffets. Indeed, it was at the hotels’ initiative that they were given to understand they would not be welcome back, and that was not because they trashed their rooms like overindulged celebrities or petulant royals. It was much worse than that from the casinos’ point of view, the problem being the reluctance characteristic of the economics profession to irrationally fritter away their money on gambling.

Kotlikoff writes like a true-blue economist, with an abiding concern for investors, when he writes of a method he recommends for “How to Invest in Stocks with Zero Risk” – the rather surprising title of his new article. I do not doubt that the system he has devised (and has programmed as an option in his software) would work. It essentially entails reducing your available spending commensurate with any capital put at risk, then raising your spending floor only once paper profits are safely converted back to safe assets.

I suggest you click on the article to see the specifics. But I will quote one insight into the implications of this system, which he calls “upside investing,” as follows:

The more one allocates to the stock market, the lower the [spending] floor and the higher the upside. The less one allocates, the higher the [spending] floor and the lower the upside.”

In other words, just like the economists disapprovingly watching folks in the casino put their money at risk, Kotlikoff’s safe investors’ minimal venturing generates minimal gains.

Coincidentally, financial advisor Michael Lonier also has an article out today describing his “bucket”-based retirement planning system designed to squeeze out any sequence of returns risk endemic to systematic withdrawal-type plans. To do this, Lonier uses four distinct portfolios, each of which he describes in detail (he himself does not use the word “buckets”).

If the approach seems similar to Kotlikoff’s, it is because both are highly conservative and seek to eliminate risks. They are, however, different, as Kotlikoff explicitly disavows buckets, seeking a system where no money can be lost; let’s just say he regards buckets as leaky.

While I acknowledge that these approaches can be of great benefit to risk-averse investors, from my perspective, both approaches seem more conservative than the equal-weighted “tripod” approach I frequently recommend of allocating a third of one’s portfolio to stocks, real estate, and cash each. The reason is simply that, while I want to limit risk, for the cause of retirement security, I’m willing to take risks for the cause of retirement sufficiency.

I remember when my naturally risk-averse son was young and he would notice the sell-by date on the food he or I were then eating had been reached, he yelped, eyes bulging. I would make a joke about our final good-byes to bring him back to reality.

In other words, there is such a thing as being overly cautious. Every investor’s situation is unique, so I would never make light of a conservative approach. Some people have too little saved to afford risks. And, ironically, it is those who have an abundance of savings who won’t be hurt by maintaining such conservative portfolios – the rich can afford risk or buy the luxury of avoiding it altogether. For most people, portfolio strategy is all a matter of balancing individual circumstances. Still, taking reasonable risks within reasonable safeguards at earlier ages definitely leaves open more options at the retirement stage.

Mortgage Renewal

Talk to a mortgage professional before signing that renewal, this might save you lots of money and avoid some potential headache down the road. And if you want to stay with that lender, go back and negotiate, what you've been given is not the best deal you can get. And they're hoping that you sign and be done with it. Call Me Now.

Short supply keeps GTA new-construction home prices high in March

By Tess Kalinowski

 Real Estate Reporter

Tues., April 24, 2018

 

 

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Tight supply and demand from a growing population continues to buoy the cost of new construction homes in the Toronto area but belies a housing market that is badly out of balance, says the head of the building industry association.
“Until we get alignment on how to fix the supply problem, we’re going to continue to have challenges within the housing market,” said Dave Wilkes, CEO of the Building Industry and Land Development Association (BILD).
Single-family home prices, including detached, semi-detached and townhouses, rose 7.4 per cent year over year in March to $1.207 million, although they dropped about $12,000 compared to February.
Condo prices increased more dramatically — rising 39.4 per cent year over year to an average cost of $742,801.
Overall there were 1,960 new home sales in the Toronto area in March, most of them condos, according to BILD.

Single-family homes accounted for only 311 of total new home sales in March. That’s up from 265 in February but down 77 per cent year-over-year and 79 per cent below the 10-year average.
Most condo sales in the region were in the City of Toronto where 1,006 units sold in March, down from 3,633 a year ago. But only three new-construction single-family homes were sold in the city last month. More than a third, 133, of the single-family transactions were in Peel Region in March.
The “quiet” March was a more normal month than last year’s unusually hot real estate season that saw both re-sale and new construction home prices soar across the region.

That’s due in part to an extraordinary 2017 that prompted some buyers to move ahead with a purchase ahead of this year, said Patricia Arsenault, executive vice-president of Altus Group, which compiles the building industry statistics.
“After an adjustment period, we expect the monthly pace of condo apartment sales to improve,” she said in a press release on Tuesday.
There was about four months of inventory in the market last month. A healthy market would have nine to 12 months’ supply, according to BILD.
“We have some challenges within the fundamentals of the marketplace in the GTA. The key challenge is affordability and we’ve seen the impact of some government policies on dampening some of the demand,” said Wilkes in reference to the provincial foreign buyers’ tax, interest rate increases and mortgage rules that have been launched in the last 12 months.
“More importantly we have an ongoing supply problem,” he said.
That is impacting consumer choice and it’s a sign the market isn’t responding to the demand that will be a factor in the Toronto area in the coming years. He said the industry is trying to respond by providing larger, family-friendly condos for buyers who choose not to commute long distances for a house with a yard.
There were 12,457 housing units available in March — 8,756 were condos and 3,701 were single-family homes.
Builders and government need to push for updated zoning rules that don’t support the kind of intensification that the province has legislated, said Wilkes.
It can also take eight to 10 years to bring a project on-stream in the region because of red tape and the lack of infrastructure, he said.
Year to date, new construction home sales are down 73 per cent in the single-family home category. Condo sales have declined 49 per cent year over year.
The widely reported cancellation of some condo developments and reports of home buyers struggling to close on pre-construction houses purchased last year before real estate sales fell and new mortgage stress tests were launched, don’t appear to be impacting the industry, said Wilkes.
“As you look in the condo market where there’s 600 active projects underway in the GTA, the vast majority will close as anticipated,” he said.
Although he couldn’t provide precise numbers, Wilkes said builders are also challenged by rising costs of materials such as concrete, drywall and windows.

Financial Planning

A Comprehensive Financial Plan

FINANCIAL PLANNING
Financial planning is not just about what you want to do with your money, but what you want to do with your life. Sometimes it’s a very difficult balancing act between your current needs/desires and your future needs/desires. It’s about finding the right trade-offs that will work for you at every stage of your life. It includes investment planning, asset management and retirement planning of course, but it also includes personal risk management and insurance needs, estate planning, sound day-to-day, year-by-year money management, and sound income tax planning. Most importantly, it’s about how all of those pieces fit together to form the optimum financial plan to make your finances work best for you.

The Financial Planning Process

Financial planning consists of six fundamental components – Financial Management, Tax Planning, Asset Management, Risk Management, Retirement Planning and Estate Planning.
With financial planning, none of the above components are ever dealt with entirely in isolation– it is the integration and interdependencies among these components, as well as the need to analyze and synthesize information presented to formulate strategies, which distinguish financial planning from other forms of financial advice or financial intermediation.
Specific product recommendations or sales are not, in and of themselves, financial planning activities. While the process leading up to a specific product recommendation may well involve some financial planning activity, the actual product recommendation clearly falls outside the scope of financial planning.

The Six Step Process to Financial Planning

Establish the Engagement: Define the Terms of the Engagement

The client and MoneyValue Advisor will define and agree on the scope of the financial planning engagement (“engagement”). Details about each party’s responsibilities, the time frames of the engagement, compensation, and conflicts of interest should be set out in writing in a formal engagement letter or in a Letter of Understanding, signed by both parties.

Gather Client Data: Determine the Client's Goals, Needs and Priorities

MoneyValue Advisor will discuss the clients’ financial goals, needs and priorities with them before making and/or implementing any recommendations. The Advisor will then gather all quantitative and qualitative information relevant to the engagement. Sufficient information should be obtained from the client before making and/or implementing any recommendations.

Analyze the Client’s Financial Information: Analyze the Information with Respect to the Client's Goals, Needs and Priorities

MoneyValue Advisor will then analyze all information to determine the client's financial situation, and evaluate to what extent the client's goals, needs and priorities can be met under the current circumstances.

Develop and Present the Financial Plan: Identify and Evaluate the Financial Planning Strategies

MoneyValue Advisor will identify and evaluate financial planning strategies to achieve the client's stated goals, needs and priorities. Advisor will then develop recommendations to achieve the client's stated goals, needs and priorities, and should communicate these recommendations so that the client understands them.

Implementation of the Financial Plan: Agree on Implementation Action, Responsibilities and Time Frames

The client and MoneyValue Advisor  should agree on implementation action, responsibilities and timeframes. The client and the Advisor professional will then act to implement the approved recommendations.

Review the Financial Plan: Agree on Responsibilities and Time Frames for the Review and Re-Evaluation of the Financial Plan

The client and MoneyValue Advisor should agree on a time frame for monitoring and evaluating the financial plan. The client and the Advisor will then review the financial plan to assess its progress, to determine if it is still appropriate and to confirm any revisions mutually considered necessary.

In life, almost anything can happen to anyone, at anytime, anywhere. You can’t plan for it, but having a comprehensive financial plan can give you the security of knowing that you will still be able to look after the people you care about.
 
Contact MoneyValue Today.

Visit https://moneyvalue.ca



The Canadian Institute of Financial Planners (CIFPs)

DLC Leasing

FINANCING SUCCESS: FINDING FUNDING WHEN THE BANK TURNS YOU DOWN
For businesses large and small, a loan may be needed to overcome financial distress, purchase real estate, or acquire equipment to make their jobs easier. Business loans come in all sizes and for use in every aspect of business. Depending upon the size, age, and niche of your business, you can find available funding for every financial need that you can think of. The problem isn’t the availability of funding, it is the turndown rate of traditional banks that makes obtaining these loans so difficult. Businesses which have been turned down for a loan by a traditional bank often meet their ultimate end through failure. This is because business owners and representatives do not realize that alternative lending options exist and that they are easier to obtain than you may think.
What is Alternative Funding?
Dominion Lending Centres Leasing provides financing options for businesses who have been turned down for a traditional loan or for businesses that do not meet the requirements for a traditional loan. DLC Leasing matches businesses with lenders and investors within their network to provide funding outside of the traditional finance institutions. Brokers will assist business owners in finding the right loans to suit their needs and they will help with the application process as well.
Alternative funding is often grouped into specific niches. Lenders and investors will provide funding for certain needs rather than generalized financing. One lender may choose to provide funding for businesses which are in the construction field while another may choose to provide funding to businesses in retail or food service. This choice will often reflect the resources and network of the lender and will give the borrower a greater picture of where the money is coming from.
What Type of Loan Do You Need?
Every business is different and the needs of those businesses vary just as much. Where one company needs funding to pay for employee wages or utility bills, another may be looking for funding to purchase another location. The size of your business will be a determining factor for the amount of funding that you can receive. A larger business, with more income, will receive a larger loan where a small business will receive a lesser amount. Besides the size of your business, your loan broker will need to see detailed financial records, copies of your tax statements, and may even need to evaluate your accounts receivable.
When applying for a loan of any size, it is important to know what type of loan you need ahead of time. Here is an example of some of the most popular business loans available:
Equipment loan – Funds are used to purchase equipment for business use. Either to replace old equipment or to upgrade to more modern equipment. This can be used for large machinery and production equipment as well as office and restaurant equipment.
Real Estate loan – This type of loan is used to purchase real estate for business use. It cannot be used for personal real estate and will likely be calculated based on the business income.
Hard Money loan – Typically secured by real property and are often a few months to only a few years in length. Hard money loans provide funding to assist in a temporary financial situation or while your business is waiting for long-term financing to be approved
Accounts Receivable loan – The amount of this loan is based on your current accounts receivable and can usually be used for any financial needs of your business. This type of loan provides funding to help you get through financial distress because of money that you are waiting to receive.
Once you have decided the type of loan that your business needs, you will need to find a reliable, honest and knowledgeable commercial finance broker to work with.


Courtesy of Jennifer Okkerse, DLC Director of Operations, Leasing Division

Bank Mortgage Insurance Versus Life Insurance

Bank Mortgage Insurance Versus Life Insurance: Pros and Cons

There’s no doubt, your home is likely the largest purchase you’ll ever make. If you arrange your mortgage through the bank, it is their responsibility to ask you if you want to insure your mortgage through them. While it’s easy to say yes, it’s a good idea to explore your options thoroughly first. Mortgage insurance is a good idea for some, but there could be a better option – life insurance. Let’s look at each closely and compare them for their drawbacks and their benefits.

Bank Mortgage Insurance vs. Life Insurance:

Who’s Selling the Product?

For the most part, the person who sells you mortgage insurance at the bank is an employee of that bank. They are trained to sell you the products and services they offer. They are not, however, trained in other options and will, therefore, not offer you a more suitable option. When it comes to insurance premiums, there are no discounts available based on your health or family history, and premiums are subject to PST.
Certified agents who have been trained in many products, on the other hand, sell life insurance products. This means that they are able to find the product that best fits you and your family. Whereas there are no discounts available through your bank, life insurance companies offer discounts based on your health and family history, and premiums are not taxable. Furthermore, you choose your own beneficiary, whereas when you go with the bank your mortgage lender is the beneficiary.

The Policy Details

When you choose bank-offered mortgage insurance, you cannot consolidate policies. That is, you have to keep your mortgage insurance policy separate from your other insurance policies. When you choose life insurance, however, you have the ability to consolidate a term life policy with other insurance coverage, which allows you to take advantage of a lower rate plan.
Life insurance is more flexible than bank-offered mortgage insurance as well. With life insurance, you are able to switch lenders and take your coverage with you if you move. If you choose, coverage can be arranged for the rest of your life. With bank-offered mortgage insurance, on the other hand, you cannot take your coverage with you, as it is limited to one specific property. Some bank-offered mortgage insurance policies have restrictions for people over 60 years of age.

The Coverage

Regardless of the mortgage amount outstanding, if you paid for $250,000 of life insurance coverage, then $250,000 will always be the lump sum payment amount. Your coverage, therefore, remains constant. With bank-offered mortgage insurance, your coverage value decreases as you make payments because it matches your outstanding mortgage balance. Your cover value, therefore, is the amount of coverage you paid for minus the mortgage principal payments you’ve made.

Renewal Options

With bank-offered mortgage insurance, you are not guaranteed renewal at the end of your mortgage term. Policy terms and your insurance provider can change as well, and you cannot be covered for life. You can buy life insurance policies, however, that extend 10, 20 and even 30 years, with guaranteed renewal at the end of the policy. Your policy terms do not change, and the policy premiums are guaranteed. What’s more, there are policies available to convert to a permanent policy. Finally, while your mortgage lender owns the certificate of insurance when you go through the bank, when you choose life insurance, you own the policy and the coverage.

The Winning Option

While it’s easy to accept bank-offered mortgage insurance, it’s not always the wisest course of action. Shop around, compare policies and make the most educated choice for you and your family. You might be surprised by what you find in term life insurance – and how open your options really are.

For all your Life Insurance Needs,

Visit https://moneyvalue.ca