November 25, 2017

The Facts Behind Our Rising Debt Levels

We are continually being reminded that Canadians are overextended and in too much debt. So much so, the Ministry of Finance has made getting a mortgage more difficult and changed the rules to qualify for financing.

What has recently been discovered is that while this may be true, we have generally borrowed wisely to build our net worth to record levels. Warnings about household debt often ignore assets and skew the picture.

The $10.3-trillion in net worth of Canadian households is the result of debt accumulated to finance assets such as real estate and investments, according to a Fraser Institute report. “When looking at debt levels it’s important to consider the degree to which Canadians are also using it to increase their net worth.”

Canadian household debt has topped $2 trillion but two-third of that is in mortgages (the rest is made up of credit card and other debt) and a new report says that helped fuel unprecedented levels of household net worth.

Canadians are not being irresponsible with household debt. Household assets, such as real estate, pensions, financial investments and businesses, have grown from $2.2 trillion in 1990 to $12.3 trillion in 2016.

It chastises governments for cautioning about household debt when their own finances are less favourable. “Governments across Canada have been racking up debt, particularly since 2007, but the net worth of governments in Canada has actually decreased,” said Di Matteo. “It’s somewhat hypocritical for governments to warn Canadians about rising household debt levels given the state of their own finances.”

Those without mortgages are seeing a declining trend in their average credit scores that began in 2015, along with an increasing likelihood of bankruptcy. As well, mortgage delinquencies for consumers over 65 are the highest of all age groups and rising, and higher delinquency rates for auto loans persisted throughout 2016. BMO Wealth Management reported that millennials say their top financial priority is paying down debt. It beat out finding meaningful and better-paying work, purchasing or upgrading a home and upgrading education.

“We may be borrowing, but we’re doing it in a pretty savvy way,” said Pattie Lovett-Reid, CTV News chief financial correspondent.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

http://www.ctvnews.ca/canada/canadians-record-debt-levels-have-resulted-in-record-net-worth-report-1.3508018

The Art of Mindfulness

I read a very interesting article about a English teacher in one of the poorest areas of the Bronx teaching his students about Mindfulness.  About being aware of our feelings, our emotions and how they impact us.  About being focused and aware of our surroundings.  The school is known as ‘a transfer school’ designed to re-engage students who have dropped out or fallen behind.  Mindfulness is the ‘act of paying attention on purpose’ with a non-judgemental attitude.

The students were taught five-minute mindfulness exercises—from counting breaths and focusing on the sensations of breathing, to visualizing thoughts and feelings, to help train their attention, quiet their thoughts, and regulate their emotions.

Mindfulness is widely considered as an effective treatment for children, adolescents and adults with aggression, ADHD, anxiety or mental disorder.   It improves attention, reduces stress and results in better emotional regulation and an improved capacity for compassion and empathy.  Mindfulness is now spreading to schools, where it could potentially have an impact on students’ well-being.  It has to be better than all the drugs that are prescribed!

They started teaching mindfulness in the U.K. in 2007.  Teachers can enrol in a 6 week Mindful School Training in order to teach these skills to students.  Mindfulness would also help if applied to teacher education as a way to help prevent burnout, as it is a major issue, given that 20 percent of teachers in high-poverty schools leave within their first year.

A great reminder for us all!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

What Hosts And Guests Need To Know About Short Term Rentals

You are thinking of renting your home, condo or cottage on Airbnb, Bookings.com and Homeaway but what are the legal implications for both the hosts and guests.  These include local regulations, liability insurance coverage and protecting yourself from scams. The following tips will help you avoid common problems and make informed decisions.

  • Are you permitted to rent or sublet your property? Local laws vary on short-term rentals. Some cities have sought to limit these rentals to preserve tax revenue. Before you consider hosting, check the local laws. If you are part of a homeowner’s association (HOA) you will need to consult your bylaws to determine whether you are permitted to rent out your home.
  • What is the worst that could happen? You have probably heard horror stories of properties being severely damaged by guests. There have also been cases where a guest refused to leave under squatter’s rights. For every one of these stories there are thousands of no hassle reservations and great stays but to prepare and protect yourself it is important to consider these potential complications. The key is understanding the law before you become a host. Guests should carefully review rules and terms to understand their rights in the event of a dispute.
  • Does the existing homeowner or renter’s insurance protect the host from liability? The answer depends on the specific coverage the host maintains. Some policies explicitly prohibit renting or subletting the insured property. It is important to review your policy carefully. Airbnb and some other booking companies now offer secondary liability insurance for hosts.
  • What types of scams are common on these sites? Both hosts and guests should beware of scams, which have grown more sophisticated and difficult to identify. Watch out for incredible listings at prices that are too good to be true. Also, beware of hosts that request funds via wire transfer.  Keep all payments and messages inside the listing website’s system.
  • How important are reviews? Reviews are extremely important for listing sites. They help identify troublesome guests and bad hosts. Read reviews carefully before making a reservation and look for warning signs about the rental and the host.
  • What if a guest or host has no reviews? New users do deserve some extra scrutiny but keep in mind everyone starts somewhere. Has the user been verified or vetted by the listing site?  Ask a lot of questions and make sure the answers make sense. If you are skeptical see if you can set up a phone call or Skype chat through the listing site to confirm the host is legitimate.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

https://www.legalshield.com/blog/short-term-rentals-what-hosts-and-guests-need-know

Watch Out, Tighter Mortgage Lending May Still Be Coming

When will it stop!  After all the changes implemented to cool the housing market and reduce consumer debt, more tightening may still be coming.  Wouldn’t you think that the Ministry of Finance and OSFI would wait to see the impact before implementing more changes?

The recent changes targeted insured mortgages.  Now the Bank of Canada has identified the uninsured mortgage market as the next place to make tougher regulations.

The first measure that is likely being considered is related to Home Equity Lines of Credit (HELOCs). This is clear for two reasons. First, because the Bank of Canada believes that the greater use of HELOCs could also be contributing to increasing household indebtedness raising concerns that HELOCs may be putting some Canadians at risk of over borrowing.

The critical policy question that the Department of Finance could be considering is whether to extend the stress test for insured mortgages to uninsured mortgages as well.  This could possibly have an impact in further cooling the markets of Toronto and Vancouver.

Let’s hope the government shifts their focus to unsecured household debt instead of further secured debt restrictions. However, if the Bank of Canada’s review is representative of the Ministry of Finance’s considerations, watch out for changes to HELOCs with the stress test being applied to uninsured mortgages.

We should all write to our MP’s, enough is enough.  The market is cooling and all that is going to happen is more expensive mortgage financing and reduced competition.  Go after the unsecured loans and credit card companies, that is where consumer debt is out of control!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

https://www.canadianmortgagetrends.com/2017/06/is-the-bank-of-canada-signalling-that-more-mortgage-rule-changes-are-coming/

Mindful Money Tips

Why is it we can talk about any subject but money.  We can give intimate details about our health issues, relationships, the bedroom but not our money situation.

Why is there so much shame and guilt around our finances?  We are always looking in the past, we should have done this or if only we had done that.  Only look back to learn from the past, not to blame or berate ourselves.  Look forward with the goal to empower yourself on how to change in order to give youself the life you want.

Here are some tips on how financially successful people achieve their goals:

  1. Devote at least 1 hour each week to manage and plan your finances.  Update your budget, review upcoming expenses, pay bills
  2. Read about personal finance each week.  Break up your financial education into chunks and choose 1 topic a week
  3. Have conversations with financially successful people you respect, what do they do?  What has worked and what has not. Most people love to help and share
  4. Try different strategies and find what works best for you.  Try different types of budgets, goal setting
  5. Know your numbers.  What do you need to make to cover all your expenses and fund your financial goals.  Get clear on your magic numbers
  6. Separate your business from your personal accounts.
  7. Build a cash surplus.  It would be optimal to have 6-12 months cash set aside to cover your expenses
  8. Pay off your debts.  Build a plan to pay down your debts every month not just the minimum payment
  9. Think about your retirement plan.  Start now, it is amazing how quickly it will grow

Financial education is the key, don’t be frightened of the subject.  Watch your money grow and reduce the financial stress in your life.  Have fun with your money!!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

article:  https://www.mindbodygreen.com/articles/10-mindful-money-habits-of-successful-entrepreneurs?utm_term=pos-5&utm_source=mbg&utm_medium=email&utm_content=daily2&utm_campaign=170619