Basics of Housing Mortgages
The Canadian government has announced tightening of mortgage and financing rules beginning April 19th. The government has though declined to consider reducing the current maximum amortization period of 35 years and the minimum down payment of five percent of the value of the house.
Here are some basic pointers to the different types of mortgages available in Canada.
Mortgages can be in general classified into two types;
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Fixed Rate Mortgage (FRM):
These are closed mortgages. Interest rate is fixed for specific term (for example, five years) and you cannot end it beforehand without paying a penalty.
Advantage: you will know the amount of interest and principal you would be paying for the term. Even if the interest rate rises you mortgage interest rate will remain same until end of the term.
Disadvantage: If the interest rate goes down, as it has been over the past few quarters, you will not benefit as your interest rate is locked for a fixed term.
-
Variable Rate Mortgage (VRM):
Here, the interest rate is pegged to prime rate. If prime rate changes your mortgage interest rate will change accordingly. Your payment amount remains same but interest component of the payment will change.
VRM can be further divided into two sub-categories.
Closed VRM:
Interest rate is variable for the term. But you cannot collapse before the end of term unless you pay penalty.
Advantage: If interest rate drops your mortgage amount will drop too. The interest portion of your payment will be less and you will pay more towards principal.
Disadvantage: If the interest rate goes up your mortgage amount will also go up and you cannot collapse the mortgage. If this happens interest rate of your payment will be more and you will be paying less towards principal.
Open VRM:
Interest rate is variable and it is not locked for the term. You can pay off the mortgage any time.
Advantage: If interest rate drops your mortgage rate will also drop. The interest portion of your payment will be less and you will pay more towards principal. If you feel the interest rate is going to rise, or if the interest rate has gone up, then you can convert it to a fixed closed mortgage without any penalty.
Disadvantage: Interest rate for these types of mortgages is usually higher than other two.
Sunoco Performance Points — A Gas Card With Rewards – 4
The price of gas (petrol) has gone up over the years, but there is nothing we can do about it. If there is at least a small degree of comfort, it is that with strategic use, you could get something back from the gas stations or companies, and this is in the form of the now-favourite points.
The series of essays will consider some of the benefits offered by the gas stations. We will only consider the status in Ontario, and also only the following four majors – Petro-Canada, Shell, Esso and Sunoco.
In Part 4, we analyse some of the benefits of using the Sunoco gas station.
Benefits come primarily through two types of cards – Sunoco Performance Points and the HBC Credit Card or HBC MasterCard.
Both are free.
Sunoco Performance Points Card
Points are awarded for the following:
Ultra 94 fuel: 20 points/litre
Sunoco 91 fuel: 5 points/litre
Sunoco 89 fuel: 5 points/litre
Sunoco 87 (regular) fuel: up to 3 points (you will have had purchased 100 or more litres of regular fuel during the previous month to receive 3 points; otherwise, you get one point/litre)
Gold diesel: 10 points/litre
Regular diesel: up to 3 points/litre (same rules as Sunoco regular fuel apply in terms of the number of points awarded)
Eco-wash/Eco-bright/Eco-brilliant car-washes: 30 points/dollar
Eco-wash/eco-clean: 20 points/dollar
In-store merchandise: 20 points/dollar
Rewards:
20,000 Performance Points= $ 20.00 Sunoco gift card (to be used to purchase fuel, car-wash or in-store merchandise)
Partnership Programs
If you have HBC Credit Card or HBC MasterCard, link your Sunoco Performance Points account and receive 50 HBC Points for every dollar spent.
To know more about the program, or to apply, go to the Sunoco Loyalty Programs Website.
Shell Canada — Tanking With Rewards – 3
The price of gas (petrol) has gone up over the years, but there is nothing we can do about it. If there is at least a small degree of comfort, it is that with strategic use, you could get something back from the gas stations or companies, and this is in the form of the now-favourite points.
The series of essays will consider some of the benefits offered by the gas stations. We will only consider the status in Ontario, and also only the following four majors – Petro-Canada, Shell, Esso and Sunoco.
In Part 3, we analyse some of the benefits of using the Shell gas station.
Benefits come primarily through two types of cards – Shell’s partnership with Air Miles Program and the four different types of MasterCards from Bank of Montreal (BMO).
Air Miles Program
You can swipe the Air Miles card to get the following:
One Air Mile for the first 20 dollars, and one Air Mile for every $ 30.00 thereafter for fuel and other purchases at Shell.
Two Air Miles on oil change services for up to $ 14.99, three Miles for between 15.00-29.99 and five Miles if the value is more than $30.00
There are also special offers from time to time.
Shell/BMO MasterCards
No Annual Fee Cards
Shell Air Miles MasterCard
Benefits:
Save 1.5 cents on every dollar spent at Shell, to a maximum purchase of $2500.00 per month.
1 reward Mile for every $20.00 at other locations
1.5 reward Miles if you rent car through National Car Rental or Alamo Rent A Car
Discounts on car rentals of up to 25%
Shell CashBack MasterCard
Save 2.5 cents on every dollar spent at Shell for first three months, to a maximum purchase of $2,500.00 per month
Save 1.5 cents on every dollar at Shell after first three months.
Save 0.5 cents per dollar on purchases made using the card elsewhere.
1.5 cents per dollar on National Car Rental or Alamo Rent A Car locations worldwide.
Annual Fee Cards
Shell Gold Air Miles MasterCard (Annual Fee $ 99.00)
5 times bonus miles for purchases at Shell for the first three months
2 times bonus Miles after first three months, to a maximum of $2,500.00
One Mile for every $15.00 on all other purchases
25% discount on number of Air Miles required for flights worldwide and no blackout
2 times bonus miles on National Car Rentals and Alamo Rent A Car.
Discounts on car rentals
Shell Premium CashBack MasterCard (Annual Fee $49.00)
10 cents on every dollar at Shell for first three months, to a maximum of $2,500.00
3 cents for every dollar spent after the first three months
1 cent per dollar on all other purchases
BMO Roadside Assistance at no cost
3 cents on every dollar spent at National Car Rental or Alamo Rent A Car rentals.
To know more about the Shell advantages, go to Shell Canada Website.
Esso Extra Points Card — A Gas Card With Rewards – 2
The price of gas (petrol) has gone up over the years, but there is nothing we can do about it. If there is at least a small degree of comfort, it is that with strategic use, you could get something back from the gas stations or companies, and this is in the form of the now-favourite points.
The series of essays will consider some of the benefits offered by the gas stations. We will only consider the status in Ontario, and also only the following four majors – Petro-Canada, Shell, Esso and Sunoco.
In Part 2, we analyse some of the benefits of using the Esso station.
Benefits come primarily through two types of cards:
Esso Extra or the RBC Royal Bank Esso Visa Card.
Both are free.
Esso Extra Card
One or more Esso Extra Points for every dollar spent at an Esso station. (from my understanding, points can be collected even for buying non-fuel items, such as washer fluid or food items such as chips)
If you have RBC Royal Bank Esso Visa Card, then the points are mostly doubled.
Value of Esso Extra Points and Redeeming
You can use 1800 Esso Extra Points to get a gift certificate to the value of $ 10.00
Esso Partners
Esso Extra Points can be redeemed at the following places:
Choice Hotels – 4500 Esso Extra Points = $25.00
Chapters, Indigo, Coles – 4500 Esso Extra Points = $25.00
Swiss Chalet, Kelseys, Milestones, Montanas & Harveys – 4500 Esso Extra Points = $25.00 dinner gift card
Empire Theatres, Cineplex – 4500 Esso Extra Points = movie passes for two
Roots – 4500 Esso Extra Points = $25.00 gift card
Shoppers – 4500 Esso Extra Points = $25.00 gift card
Zellers, Bay, Home Outfitters — 4500 Esso Extra Points = $25.00
Tim Hortons – 4500 Esso Extra Points = 25.00 QuickPay Tim Card
Exchange of Extra Extra Points with RBC and HBC Points
2500 Esso Extra Points = 15,000 RBC Rewards Points
500 Esso Extra Points = 25,000 HBC Points
Aeroplan
Aeroplan Cards could also be swiped at Esso stations.
You will gain one mile for every three dollars spent
And if you want to donate your Esso Extra Points to a great cause, then connect to Kidney Foundation of Canada, Canadian Hockey Foundation or to the Hockey Jersey Program.
To know more about Esso Extra Card, or to join the program, visit the Esso Extra site.
Petro Points Card – A Gas Station Card With Rewards
The price of gas (petrol) has gone up over the years, but there is nothing we can do about it. If there is at least a small degree of comfort, it is that with strategic use, you could get something back from the gas stations or companies, and this is in the form of the now-favourite points.
The series of essays will consider some of the benefits offered by the gas stations. We will only consider the status in Ontario, and also only the following four majors – Petro-Canada, Shell, Esso and Sunoco.
In Part 1, we analyse some of the benefits of the Petro Points Card offered by Petro Canada.
Petro-Canada’s Petro Points Card
This is a free card, with great benefits.
Collecting Points
If you are buying SuperClean or SuperClean 94 gas — 10 points for every litre
If you are buying PlusClean fuel – 7 points per litre
If you are buying RegularClean – 5 points per litre
If you are buying anything from the gas station’s convenient store – 20 points per dollar
Car wash – 20 points/dollar
Certigrad services – 20 points/dollar
Besides this, every now and then there are special offers, such as cheaper gas for a limited amount if you buy a particular number of car washes.
Direct Rewards
10,000 Petro Points will get you fuel worth $5.00
Petro-Canada’s advantages do not end here, though. The card is tied with a number of other retailers and you can use your points to exchange or redeem.
Canadian Automobile Association (CAA)
Once you link your CAA card to your Petro Points account, you will get 20% more points each time you use the PP.
Besides, 75,000 Petro Points will get you a basic CAA membership.
Sears
Once your Petro Points membership has been linked to Sears Club card, you can collect points whenever you use the latter to shop at Petro-Canada.
You can also exchange points between Sears and Petro-Canada at the following rate: 20,000 Petro Points=1000 Sears Points= Cdn$ 15.00
Citicard Petro Points MasterCard
You will earn 2 cents off every litre/
You will earn 10 Petro Points for every dollar you spend at the tank
Amazon.ca
You can buy Amazon gift certificates using your Petro Points. The value is: 16,000 Petro Points = Cdn $ 10.00
- You can collect Petro Points when you use Itravel2000.com to book your flights, cruises, vacation packages, hotels and rental cars. The value is 10 Petro Points per every dollar spent.
- If you have CitiCard Petro-Points MasterCard, then you earn double the points.
- You can also redeem your Petro Points towards your purchases at the value of 10,000 Petro Points= Cdn$ 10.00
And if you want to donate your Petro Points to a great cause, then connect to Canadian Cancer Society.
Your money goes towards two key programs: Cancer Information Service, which is a bilingual service giving out information on cancer, and CancerConnection, which is a telephone-based one-to-one help service connecting cancer patients or their caregivers with volunteers who have experienced cancer either as victims or as caregivers.
MBNA Smart Cash Card — A Free Card That Gives Something Back
Do you want to have a credit card for which you do not have to pay any monthly/annual fee but from which you can actually earn some bucks through cash-back programs (these are like the rewards points – the difference being the credit is accrued in real dollar terms, not just points)?
Well, MBNA’s Smart Cash Card in Canada is one of these.
For whatever reason, this is not advertised. May be the company does not want to overtly promote it. I am not sure about the reports that it is offered only to those who already have an MBNA Master Card.
But the Smart Card comes with the following:
For the first six months:
5% cash-back on groceries and gas for the first $600.00. Thereafter 3%.
1% cash-back on everything else.
After the six months:
3% cash-back on groceries and gas for the first $600.00. Thereafter 1%.
1% cash-back on everything else.
As well, if you already have another MBNA card, you could ask them to reduce your credit limit in that, and transfer the amount you asked to be reduced in the first card as the credit limit for the Smart Card. It will help maintain your credit rating.
MBNA toll free number is: 1-800-347-6262
Their website: mbna.ca
The Tax Free Savings Account (TFSA)
What it is it?
This is a new type of savings account announced by the federal government.
Starting January 2009, Canadian residents at least 18 years of age and having a Canadian Social Insurance Number (SIN) can open a TFSA account and invest a maximum of 5000 dollars a year.
The TFSA can be of any of the following types of investmens:
- In Cash
- Publicly traded securities and stocks
- Government and corporate bonds
- Guaranteed Investment Certificates (GICs)
As of next year, the maximum limit will be adjusted to inflation and rounded to the nearest 500 dollars.
The income derived (such as interest, dividends and capital gains) from the account will not be taxed. But contributions to the account will not be tax deductible.
Income from this account will not affect eligibility for federal benefits and credits such as Canada Child Tax Benefit, Old Age Security or the Guaranteed Income Supplement.
Withdrawals from the account will not be taxed. Furthermore, if one withdraws, for example, 2,000 dollars this year, then next year the maximum contribution amount will go up by 2,000 dollars.
And if you had invested only 3,000 dollars this year, then the maximum allowed contribution for next year would increase by 2,000 dollars.
If the account holder becomes a non-resident for tax purposes after contributing to the TFSA, he/she can retain the account but will be taxed for contributions while retaining that status.
There is a possibility for the account holder to transfer the TFSA assets to a spouse or common-law partner upon death. But income derived from the account, which ceases to be a TFSA upon the death of the account holder, after the death will be taxable.
