How to get a big cheque from Revenue Canada
Equity and RRSP contribution room

by Geoff Ellingham (geoff.ellingham@vericoselect.com)

RRSP season has come and gone and people with contribution room have passed their March 1st deadline to take advantage of income tax savings by investing in RRSP’s.

As most people know, the more you contribute to RRSP’s the less you pay in income tax.

With 5 year interest rates below 3%, not only will people who re-finance be able to use some of their equity to top up their RRSP’s, they will also most likely save money on their mortgage interest as well.

If you are an employee who regularly has his or her income tax deducted directly from pay cheques, then there is an opportunity to get that money back in the form of a tax refund cheque. It works out to around one third of the money contributed to RRSP’s.

So if you have $50,000 available to contribute, you would receive a cheque for over $16,000 – which you could then put against the mortgage. Your RRSP account would go up by $50,000 but your mortgage would only go up by $34,000. Hopefully your RRSP manager could get you a better return on your invested RRSP’s than the 3% you borrowed it for.

To be eligible for this strategy, applicants must own their own homes and have enough equity available to borrow to use up their contribution room. They may even end up paying a lower monthly payment than their current one without increasing the amortisation of the mortgage depending on their current mortgage.

I help my clients do this by calculating all the costs of re-financing their current mortgage, together with the costs of setting up a new one, with the amount they will save with the lower rate combined with the amount received from Revenue Canada.

My services are free but the cost to get out of a current mortgage early varies depending on the policies of the current mortgage lender. In many cases it is worth it. But if not, you haven’t lost anything.

Want to learn more? Contact Geoff directly!

Want to submit a guest blog? Please send us your contact details and we will work our magic.

To contact Geoff, you can email him (his email address is above), or even better: connect with him on LinkedIn through our Startup Phase Forum 2 LinkedIn Group: http://goo.gl/D13Pm.

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The Annual Mortgage Review

  by Sandra Liang (sandra@MortgageBrokerTeam.ca)

We increase our clients’ net-worth by over $500,000 directly as a result of our Annual Review Process.

Every year we provide the Annual Review Process – a free service – to our existing clients as a value-added service.  And, If you are not our client already, you are in luck!  We are offering this service to non-clients for the year-end of 2012 in order to show our appreciate for the Startup Phase Forum giving us this blog space!

Given that you have the ability and capacity to make your family’s life better after a mortgage is completed, and life brings up unexpected changes, you need to update your mortgage information – you could see some big cash benefits.

We use this updated information to make sure your mortgage and portfolio is optimized and your potential savings are maximized.  Once complete, you will receive an annual review report showing your mortgage and total debt balance at term completion, along with a current path and potential mortgage and total debt balance suggestions.

We introduce you to our Inflation Hedge Strategy, which protects you from rising interest rates and prepares you for any payment shock at renewal.  These numbers will be provided in your Annual Review Report.  We will also review your goals for your principal residence and real estate holdings over the next 5 years. This helps us optimize your situation and especially your potential tax deductions down the road.

These details are required to property assess your situation:
– Addresses of currently owned real estate;
– Original mortgage balance(s) *start of term;
– Current lender(s);
– Interest rate of mortgage(s);
– Renewal date of mortgage(s);
– Payment frequency (bi-weekly, monthly, etc);
– Any pre-payments;
– Rough balance of current debts / liabilities with interest rate charged;
I.e., $20,000 owed to credit cards, at 19%, OR $10,000 LOC (line of credit) at 8%
– Current property assessment(s);
– Who is your current financial advisor?
– Who is your mortgage or life insurance with?
– Who is your accountant?
– Are you currently happy with your situation?
– Are you prepared for Payment Shock?
– What are your goals for your principal residence and real estate portfolio over the next 3-5 years?
For example: (a) Paying down principle residence mortgage, (b) Eliminating debt, (c) Saving down payment for investment property

Please send us your contact details and we will work our magic – you can email Sandra (her email address is above), or even better: connect with her on LinkedIn through our Startup Phase Forum 2 LinkedIn Group: http://goo.gl/D13Pm.