What is EBITDA and Why Should You Care?

What is EBITDA? 

If you’re an entrepreneur or business owner, you may have heard the term ‘EBITDA’ before, but do you know the meaning of EBITDA? Either pronounced ‘eh-bit-dah’ or ‘ee-bit-dah’, the word is an acronym for the phrase, ‘Earnings Before Interest, Taxes, Depreciation and Amortization’. EBITDA is a financial metric that shows a company’s profitability by focusing on its core operations, excluding costs related to financing, taxes, and non-cash expenses like depreciation and amortization. Essentially, EBITDA gives a clearer picture of a company’s operating performance, without the impact of financial and accounting decisions that often fluctuate. 

EBITDA is sometimes used to determine whether a business can support a potential loan, line of credit, or mortgage they may be looking to take on. It allows lenders and potential investors to understand profitability clearly and removes many variables that can make it hard to compare “apples to apples”. It’s important that business owners understand the EBITDA formula and how it is calculated because it could be the difference between securing a business loan or missing out on key growth opportunities. 

How do we calculate EBITDA? 

As we now know, EBIDTA is “earnings before interest, taxes, depreciation, and amortization.” To calculate EBITDA, we have to add those items back to earnings (also known as net income). 

The EBIDTA formula is EBITDA = Net Income (Earnings) + Interest + Taxes + Depreciation + Amortization 

Or if you have operating income, it can also be calculated as:  

EBITDA = Operating Income (EBIT) + Depreciation + Amortization

Let’s have a look at the components that make up EBITDA. 

  1. Earnings (Net Income)
  2. Interest
  3. Taxes
  4. Depreciation
  5. Amortization

Earnings (Net Income)

Earnings, also known as Net Income is found in the business’s financial statements at the bottom of the Income Statement for corporations, or schedule of Business Activities for sole proprietors. They can also be often labeled as Net Profit/Loss or Net Operating Income. This is the summary of all sources of revenue minus all eligible expenses. This includes cash and non-cash expenses, and while Net Income may be a metric of profitability, it may not fully represent the actual cash available in the business as it includes paper only expenses for tax purposes and existing financing costs.

Interest

Depending on how a business is capitalized, for example how its assets are structured, there may be financing already in place from how they bought those assets. If so, any interest paid on the debts for those assets is an eligible expense for tax purposes in calculating profitability. In this case, the interest was paid along with principal payments to reduce the debt that was taken on when the asset was bought. Upon adding back the interest will allow your Commercial & Agricultural Account Manager to compare a given business’s performance to others, regardless of how the business is financed.

Taxes

Business income taxes are the T in EBITDA. Adding taxes removes the variability in comparing the performance of different businesses due to the differences in taxes that could be required. Depending on the region, type of business, and other unique factors, taxes can vary between similar businesses, so adding the taxes payable for that year allows for a more apples-to-apples comparison of the business to others.

Depreciation

Depreciation is a paper expense for tax purposes that allows a business to write off the costs of a fixed asset over its useful life span or according to tax regulations. Since depreciation doesn’t involve cash flow, they are added back to EBITDA to provide a clearer picture of a business’s ability to repay debts. For example, a small business might depreciate equipment like machinery or vehicles, spreading the cost over several years.

Amortization

Very similar to depreciation, amortization is also a paper expense for tax purposes and is a write-down for intangible or non-fixed assets. For example, this could include goodwill paid, a first franchise fee, or patent rights. Although it helps for tax calculations, amortizations don’t involve actual cash flows and are added back to EBITDA to reflect the cash that is available for debt repayment.

So why use EBITDA and is it important for business owners and managers?

As a small business owner looking to borrow money, EBITDA may be one of the metrics used to evaluate past performance, as well as to set an expectation for your future performance over the time that you may be carrying that debt. 

Most financial institutions have a debt service covenant ratio (DSCR) that will look at the ratio of EBITDA to external payments and other significant debts the business has to pay. Depending on the industry or type of business, there will be an expectation for a minimum proven DSCR. For example, this could be 1.10:1 or 1.20:1. As part of the evaluation on whether to grant you the loan, most financial institutions may also require that you maintain that level of performance over the time that you are paying back the loan.  

For small businesses understanding EBITDA is valuable for understanding your potential borrowing abilities. By knowing your EBITDA, you can estimate a potential loan or line of credit that may be available to you and incorporate this into your plans to grow your business. 

If you’re still unsure or want to dig deeper, you can meet with one of our Commercial & Agricultural Account Managers to better understand what EBITDA is and the lending available to you to help take your small business forward.  

Book an appointment today to get started.

How to Start Saving for a Down Payment

Saving for a down payment is an exciting first step to home ownership. Whether you’re saving for your first home or maybe a vacation property, here are 6 tips and tricks to help you save money for a down payment, understand what solutions work best for you, and how you can maximize your savings and get started on your journey to owning a home.

In Canada, a down payment is required when mortgaging a property. Your down payment must be at least 5% of the homes total purchase price. If a home is more than $500,000 a 5% down payment is required for the first $500,000 and 10% is required for anything the remaining balance. Homes that have less than a 20% down payment are considered a high ratio mortgage and are required to have mortgage default insurance.

Separately, a minimum 20% down payment is required for a 30-year amortization period or for a non-owner occupied home. Don’t worry – You can use our mortgage calculator to understand how much you need to save for a down payment.

Now let’s jump into it.

  1. First Home Savings Account (FHSA)
  1. The Home Buyers Account
  1. High Interest Savings Account
  1. Automate Your Savings
  1. Build a Budget
  1. Put Aside Additional Income
  1. Start Saving for a Down Payment Today

1. First Home Savings Account (FHSA)

The new First Home Savings Account (FHSA) is a great tool for someone saving for a down payment as a first-time home buyer. The FHSA has the tax advantages of an RRSP and the withdrawal benefits of a TFSA, meaning that you can deduct contributions from your taxes, and you are also not taxed when you withdraw. Canadian residents aged 18 years or older who have not owned a principal residence within the last 4 calendar years can save up to $8,000 a year in the account and can carry over unused contribution room to the following year. As a first-time home buyer you are unable to use an FHSA for a non-owner occupied home.  Reach out to a Mainstreet Advisor to open your FHSA and get started on your path to home ownership.

2. The Home Buyers Plan

The Home Buyers Plan (HBP) allows you to access funds from your Registered Retirement Savings Plan (RRSP) to put towards the purchase of your first home. Although this home must be your principal residence, it doesn’t have to be a single-family home, it could be a multi-family home allowing you to rent out a portion of that property to cover expenses. Each person can withdraw up to $60,000 interest free from their own RRSP account to contribute towards the down payment of the home. Funds withdrawn from your RRSP are tax free provided they are paid back within 15 years of the home purchase and repayments must start no more than five years from the withdrawal date.

3. High Interest Savings Account (HISA)

Another great alternative to save for down payment is with a High Interest Savings account (HISA). A HISA is a great way to save with higher interest rates than a regular chequing or savings account. Mainstreet’s HISA has no monthly fee and unlimited deposits!

This account also allows you to jointly save with your partner or spouse and is a great solution for those who have saved the maximum amount in their FHSA or TFSA. At Mainstreet we provide you with the ability to have your HISA be within a FHSA to allow for the tax benefits. To open a HISA book an appointment with one of our advisors or open your account online using Open Anytime.

4. Automate your Savings

One of the best ways to start saving for your house down payment is to set up a scheduled withdrawal plan. You can do this by having a set amount of money come out of your chequing account on a regular basis and go into a savings plan. Whether you decide to set up a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP), First Home Savings Account (FHSA) or a high interest savings account (HISA). This is a great hands-off approach to take in reaching your goal of saving to buy your home. Understand what is best for you by booking an appointment with one of our advisors.

5. Build a budget

If you’re unsure about how much you can set aside each month to save for a down payment, another option that can help you get started could be creating a budget. Understanding where your income is going each month and what you have left over will make you aware of what your fixed and discretionary expenses are and where you can make adjustments to achieve your savings goals in the time frame you choose. Any extra funds you have left over can go towards your savings goals for a down payment. A Mainstreet advisor can help you create a budget that fits your financial goals.

6. Put aside additional income

Another great option that can help you save money for a down payment for a house is putting away any additional income you may receive throughout the year. This extra income could include your bonus from your job, inheritance, cash gifts, your tax refund, or money received from a side hustle. Putting this money aside means a boost to your savings without impacting your monthly budget.

7. Start Saving for a Down Payment Today

Saving for a down payment is an exciting goal and it can take some planning to help keep you on track. You can reach out to a Mainstreet Advisor to get started or to learn more about saving for a down payment, creating a savings plan or opening an account. Book an appointment here. Interested opening an account online? Use our Open Anytime to get started.

How To Become Mortgage Free Sooner

Ever wonder how to pay off your mortgage faster? Owning your home sooner and becoming mortgage-free is a financial goal that many people strive for. Paying less money in the long run, freeing up cash after your payments are over and increasing your home equity are just some of the benefits of being mortgage free sooner. Learn the benefits of a Mainstreet mortgage here. 

In order to understand how to pay off your mortgage sooner, let’s start with understanding what makes up your mortgage payment. When you make a mortgage payment, a portion of the payment goes to the original mortgage amount owed (also referred to as the principal) while the other portion goes to paying off the interest. Typically, as time goes on, a higher portion on each mortgage payment goes towards paying off the mortgage principal vs the interest. Lowering the amount of interest you pay, helps put more of your payment towards the principal. 

Below, we will outline a few simple strategies that allow you to be mortgage free sooner. 

Change your mortgage payment schedule.

The first way you could shave years off your mortgage and save money is by changing your payment frequency or using accelerated payments. If you switch your monthly mortgage payment to a bi-weekly payment schedule you will make 26 smaller payments throughout the year. You can also opt to use accelerated semi-monthly or weekly payments. This method can be done by dividing your monthly payment into 2 or 4 smaller payments that total the monthly payment amount. Both accelerated and adjusted payment frequency can reduce the amount of interest paid on the mortgage, which can translate to saving thousands of dollars in interest over the lifetime of your mortgage and reduce the total amount owing to become mortgage free sooner. Reach out to a Mainstreet advisor to see which payment frequency works best for you.  

Shorten your amortization period

The amortization period of a mortgage is the length of time you have agreed upon to repay your mortgage. Instead of automatically picking the standard 25-year amortization period, you can choose a shorter amortization period to pay off your mortgage in fewer years. With this option, payments will be higher than a 25-year amortization period; however, if you have additional room in your budget to pay more each month, it means you will be paying less for your home in the long-run and own your home sooner. Use our mortgage calculator to understand how a shorter amortization period might benefit you.

Round up your payments 

Another great way to pay off your mortgage sooner is rounding up your scheduled payments. This option might have a minimal impact on your household budget but has big benefits and it can help you pay off your mortgage quicker. Adding a little extra to your mortgage payment, for example, from $1,950 to $2,000 or $2,400 to $2,500, is a great way to put extra money towards the principal amount and become mortgage free sooner by reducing the interest paid over the lifetime of your mortgage. Understand how rounded payments could pay down your mortgage quicker with our mortgage calculator. 

Take advantage of pre-payments 

Any time you have extra money available, consider putting it towards your mortgage to help reduce the principal amount owing. Mainstreet offers generous pre-payment options with all our mortgages which enables you to become mortgage free sooner. Our first option allows you to pay up to 20% of the original principal each year, for example, if your original mortgage was $300,000, you can pay up to $60,000 each year – even as the mortgage amount reduces over time. Secondly, monthly payments can be up to doubled. For example, if your mortgage payment is $1,500 you can double up your payment to $3,000 or pay somewhere in between if that fits your budget better. You can also make a lump sum payment towards your mortgage. This is a great way to use a tax refund or bonus, for example. Interested to know how pre-payments can get you mortgage free sooner? Book an appointment with one of our advisors.

Keep the same payment when you renew

As we know, mortgage rates fluctuate based on the Bank of Canada’s overnight rate. When your mortgage is up for renewal, if interest rates are lower than your current rate, you could opt to keep the same payment as your previous term to help pay more towards the principal amount of your mortgage. While it is enticing to reduce the payments when possible, the benefit of keeping the same payment as your previous term means that you can consistently put funds towards paying off your mortgage quicker and your household budget will remain the same. This method will save you thousands in interest over the lifetime of your mortgage.

Use income from your property to pay down your mortgage 

There are ways to make your property work for you. Perhaps you have a basement suite you could lease to help pay off your mortgage earlier or have a garage or storage space you can rent out. Using the additional income generated by renting out these vacant spaces and setting that towards your mortgage will pay off your mortgage quicker and in return you will build your home equity faster. Using our pre-payment options listed above, you can put this money directly towards the principal and reduce the interest paid over the lifetime of the mortgage.

Get Started Today

Whether your mortgage is with Mainstreet or not, book an appointment with a Mainstreet Advisor and we will work with you to discover how you can be mortgage free sooner. You can use our Mortgage Calculator to determine which options work best for you, or you can learn more about our Mainstreet Mortgages or view our rates.

What is a Home Equity Line of Credit (HELOC)?

View our HELOC rates and get started today.

What is a Home Equity Line of Credit?

A HELOC, also called a homeowner line of credit, is a form of revolving credit that allows you to borrow money using the equity and value you’ve built through owning a home and paying off your mortgage. Like a credit card where you are given a maximum amount you can spend from, a HELOC lets you withdraw an amount in relation to how much you need at the time. 

A HELOC often has a lower interest rate than traditional loans and is typically a more affordable way to borrow funds. At Mainstreet, a HELOC is secured by your principal residence and interest is only charged on the amount used. You can apply for a HELOC at any time that works for your financial needs. When the funds become available, you can use the funds as needed. 

When to use a HELOC?

A HELOC is a great tool to have in your financial toolbox. It can be used in a variety of ways to help you reach your goals. It can help consolidate higher-interest debt like credit card debt, personal loans, and overdrafts into one lower-interest payment, saving you money and simplifying repayment. A HELOC can also be used to finance home renovations or repairs. This is a useful tool for not only increasing property value but also making your home more enjoyable for you right now. It can also be used for larger purchases such as appliances, education, vehicles and more.

How much can I borrow?

There are a few factors that go into how much you can borrow. The amount you can borrow is dependent on the equity you have in your home and cannot exceed 70% of the total value of your home. As your home equity increases, so does your borrowing capacity through a HELOC. Secondly, our advisors will determine your debt-to-income (DTI) ratio; this is your gross monthly income that goes towards paying your monthly debt obligations. Debt-to-income ratio is used to understand what amount of your income is going to existing payments to ensure you are not over burdening yourself. A low DTI ratio can make you eligible for a higher loan, a lower interest rate, or a combination of both. 

Book an appointment with your Mainstreet Advisor to review your documents and understand how much you can borrow with a HELOC. 

How do I pay off my HELOC?

Regular monthly interest payments on the amount used are required for a HELOC. If you wish, you can also pay the principal of your HELOC in combination with the monthly interest payment. To put a payment towards the principal of your HELOC you can contact one of our branches, make a payment with online banking or set up automatic payments from your Mainstreet Account. Once you pay the principal, that portion of the balance becomes available again for future use. Once the entire balance is paid off, no more monthly payments are required. Your HELOC remains open with those funds available for whenever you might need it next. 

What makes a home equity line of credit different from a traditional line of credit?

Although similar, because a HELOC is secured by your home it makes it less risky for the lender and in return the lender offers lower interest rates. For the same reason, you can often borrow a larger amount, dependent on the equity that is available in your home. View our current HELOC rates. 

If you still have questions, call or book an appointment to understand how a Mainstreet Home Equity Line of Credit could help you achieve your home improvement or life goals!

First-Time Home Buyer Guide

The road to buying your first home and current mortgage rates can feel overwhelming. With many things to consider throughout the process and lots of decisions to make, it’s sometimes hard to know where to start. This guide will help you understand the steps and things to consider as a first-time home buyer.    

Navigating the complex process of owning your first home can be challenging and a time-consuming process with no prior experience. Mainstreet advisors are here to provide you with up-to-date information and step-by-step help to get you on your path to home ownership. 

  1. How much can you afford?
  2. Down Payment
  3. Closing Costs
  4. Pre Approval / Pre-Qualified
  5. House Hunting and Approval

How much can you afford?  

One of the first things to understand when buying a home is how much you’re able to afford. Having this information not only helps you plan and save, but it will help you when you begin the search for your home. The amount you can afford is determined by several factors including your household income, current debts, fixed and variable expenses and the amount of down payment you have. These factors are used to create a Gross Debt Service Ratio (GDS) and a Total Debt Service Ratio (TDS) that help lenders determine the amount of mortgage you can qualify for without overextending yourself.   

Although it can sound complicated, it doesn’t have to be! You can reach out to one of our Mainstreet Advisors who can help you get a full picture of where you are currently, what your goals are and can help create a plan to help you achieve your goals of home ownership. At your appointment you will review your financial background, and credit history. This will determine the best price range for your income and budget. We will also discuss what current mortgage rates are available to help you understand which mortgage product is right for you. 

Alternatively, you can use our Mortgage Affordability Calculator to give you a sense of the price range you are in. This will help give you a starting point as you begin your planning. 

Down Payment

The down payment is a key part of the home buying process. In Canada, your down payment must be at least 5% of the home’s total purchase price. If a house is more than $500,000 a 5% down payment is required for the first $500,000 then a 10% deposit is required for the remaining portion. Any down-payment under 20% is a high-ratio mortgage and is subject to mortgage protection insurance. Premiums are based on both the size of the down payment and the value of the mortgage. You can use the Mainstreet mortgage calculator to understand how your down payment could affect your payments. 

There are several ways to effectively save for a down payment and help you achieve your goals sooner. Let’s explore those below.

First Home Savings Accounts (FHSA)

This new account is great for a first-time home buyer. Canadian citizens 18 years and older can now save up for their first home with the new FHSA. Like a Registered Retirement Savings Plan (RRSP) contributions are tax deductible, while like a Tax-Free Savings Account (TFSA) any income made on an FHSA is tax-free. Learn more about our FHSA here. 

The Home Buyers Plan (HBP) 

The Home Buyers Plan (HBP) allows you to access funds from your Registered Retirement Savings Plan (RRSP) to put towards the purchase of your first home. Each person can withdraw up to $60,000 interest free from their own RRSP account to contribute towards the down payment of the home. Funds withdrawn from your RRSP are tax free provided they are paid back within 15 years of the home purchase and repayments must start no more than five years from the withdrawal date. 

High Interest Savings Account (HISA)

Another great way to save for your down payment is within a High Interest Savings account. You can open a savings account online in a couple of minutes and start on your journey towards home ownership. Automating deposits is a great, hands-off way to save for your down payment. Here you will earn a set interest rate with no risk to your funds. This account allows you to jointly save with your partner or spouse and is a great solution for those who have saved the maximum amount in their FHSA.

Cash Gifts

If you are lucky enough to have a down payment as a gift or inheritance from family. It is important to show how those funds we acquired. As part of the process, your advisor will review these documents and ensure that the appropriate information has been collected.

Closing Costs

Closing costs are not a factor that initially comes to mind as a first-time home buyer. These costs are expenses that are required as part of finalizing the purchase of a property. These include legal fees paid to your lawyer, title insurance, land transfer taxes, home inspections, and appraisals. Typically closing costs are between 2%-4% of the price of your home so don’t forget to include this in your savings plan. 

Pre-Approval / Pre-Qualified

When you are ready to begin looking for your home, booking an appointment with a Mainstreet Advisor is a great way to prepare. At this final milestone, you can work with your advisor to gather all the relevant paperwork and cover the last details to ensure you are ready to make the offer when you find that dream home. A Mainstreet advisor will review your supporting documents, review current mortgage rates and can pre-qualify you to make sure that when you find “the one”, the process moves quickly and goes smoothly.   

House Hunting and Approval

After your pre-approval appointment, happy house hunting! Your Mainstreet advisor is here to assist the entire way. Once you have an offer accepted on your dream home, send us the paperwork and we will take care of the rest! 

Navigating Rising Interest Rates

Do you feel like we’ve been on an interest rate roller coaster? The low interest rates that we’ve all become accustomed to seem to have disappeared, and we’re now feeling the inflation pinch – from the grocery store to the gas pump. Unfortunately, if you’re amongst the many faced with renewing your mortgage in upcoming months, it’s highly likely that you’ll be navigating the rising interest rates on that too. You’re probably left with one question: “What can I do?”

First and foremost, we recommend that you start talking with a trusted Mainstreet advisor early. Any mortgage renewal is a big decision, now more than ever, that will impact your financial life for at least the next 1 to 5 years. You and your advisor will go over all your renewal options in detail so that you’re prepared to make the best decision possible for your situation. Starting the conversation early ensures that you’re not rushed into anything or having to make a quick decision right at the renewal date.

We like to discuss your short, mid, and long-term financial goals to determine what you can do now, to set yourself up for success in the long run. With that being said, paying off your mortgage as quickly as possible may be on hold, while keeping your mortgage payment manageable is top priority.

Below we have detailed a list of items that you can review and edit to reflect what you want out of an appointment with a Mainstreet advisor when discuss your upcoming mortgage renewal:

Fixed vs. variable rates

When renewing your mortgage, you’ll need to decide whether to go with a fixed or variable interest rate. Fixed rates offer predictability and stability, while variable rates can fluctuate based on market conditions. If you want to do some research before your meeting, you can find our mortgage rates here.

Structure

You’ll need to decide on the structure of your mortgage.  Discuss with your advisor about splitting your mortgage into chunks, with the current rate environment, renewing the full balance for a 5-year term, may not be the best solution for you.  For example, what does splitting the balance into a 1- and 3-year term look like for your budget.  No one has a crystal ball regarding what interest rates will do next, keeping options on the table will allow you to make changes along the way. 

Payment Frequency

You may want to consider changing your payment frequency to either increase or decrease your payments. For example, switching from monthly to accelerated bi-weekly payments can help you pay off your mortgage faster and save on interest costs.  Aligning payment dates with your pay date will help with budgeting.

Prepayment options

You may have the option to make prepayments on your mortgage, allowing you to pay down the principal faster in order to save on interest costs.

Your financial situation

It’s essential to consider your current financial situation and any changes that may have occurred since you first took out your mortgage. This includes any changes to your income, expenses, or credit score.

Review your budget

Consider things like cancelling monthly subscriptions that you no longer use or penciling out how much that daily latte actually costs per month to get a better view on your weekly/monthly expenditures. Remember, this isn’t to take the joy out of the life’s simple pleasures, but to put you at ease when it comes time to making the bigger financial decisions. If that latte makes your day, we’ll move onto the next item on the list! Our advisors are always here to help with creating a budget that works best for you.

Some of the ways that Mainstreet may be able to help:

Refinance your mortgage

This involves completing an application and providing income confirmation. When approved you may be able to consolidate your debts into your mortgage to lower your overall monthly payments freeing up cash flow.

Payment deferral

When approved this allows you to temporarily suspend or reduce your mortgage payment for a specified period of time. This can be useful if you are experiencing financial difficulties, such as a job loss or a medical emergency. Keep in mind that the payment deferral means that once you resume payments, your mortgage payment will increase for the remainder of the term.

Modifying payment terms

By changing the terms of your mortgage, it could lower your monthly mortgage payment obligation. Doing this may help relieve financial pressure. Please note that lowering payments or extending your amortization will increase your over all interest costs. When you get back on your feet, make sure to increase your payments.

Blend and extend

This is a type of renewal where you blend your existing interest rate with the interest rate currently offered at Mainstreet. This results in a new interest rate somewhere in between. In addition, your term will be extended by the length of the new term. This can be done to adjust your mortgage terms to better suit your financial situation.

If your mortgage payments seem overwhelming and you find yourself struggling to make ends meet, there are several options that you can consider, and we’re here to help you find them and put them in place. We know how hard it can be to have these, sometimes uncomfortable, conversations, but we want to assure you Mainstreet is here to help without judgement. We live in the same communities, shop at the same stores, are subject to the same inflation, and feel that same pinch. The only difference is that because of our job, we know some tools to make life a little easier, and we want to share them with you.

Learn more about Mainstreet’s mortgage options.

Book a meeting with a Mainstreet advisor.

Buying Commercial Property

Written by: Adele Mineau

So, you’ve decided to buy a commercial property…

You have funds to invest but the stock market makes you nervous and you like the idea of investing in property that is tangible. You have made an appointment to speak with a Commercial Account Manager and they have asked for a slew of paperwork.

What might they ask for and why?

ID, Personal Net Worth Statement, 2-3yrs Personal Income Tax Returns with the latest Notice of Assessment will be requested. If you have a corporation they will also asked for Articles of Incorporation, Shareholder/Director Registers, and 2-3yrs financials with Notice of Assessment. Most of this information is easily explainable, they want to know who you are, what assets and liabilities you have, and how much you make annually. For the corporation it is necessary to know where the corporation is located, the structure of the corporation, and what the corporation can do. The Registers verify the shareholders (owners) and the directors (people who can make decisions for the Corporation). Most of this information can be forwarded via email directly from your accountant and lawyer.

When you already have a property in mind, your account manager will want to know more about the property. Depending on where you are in the process and what kind of commercial property you are looking at, an account manager could request an MLS listing, 2-3yrs financials for the property, existing leases, rent roll, a Purchase & Sale Agreement, a business plan, an ACI appraisal, an Environmental Report, and a Building Condition Assessment. It could seem like a lot, but it is important to remember the primary purpose of acquiring this information is to assist making your decision by having all the information that could influence the profitability of the investment. Some of this information is obvious, MLS listing outlines the sale information, financials provide a look into revenue & expenses, leases and rent roll can provide an idea of tenant mix and what expenses tenants are responsible for, and the Purchase & Sale Agreement provides the address, seller, buyer, purchase amount, conditions, and important dates.

Let’s discuss the remaining information as not everyone has needed to deal with this information before. A business plan provides an outline of ambitions, how they will be achieved, and a timeline for those achievements. For example, are you going to raise the rent? Is that reasonable according to the market? Will you raise them gradually?

An ACI appraisal is completed by an appraiser who is designated by the Appraisal Institute of Canada to appraise residential, commercial, industrial, institutional agricultural, land and special use property types. They are best qualified to provide an approximate value on a commercial property as they take into consideration comparables (sale prices of similar properties), income results (based on real or potential revenue considering expenses and the market), and cost approach (land cost plus cost to rebuild).

An appraisal answers the question “Are you offering too much?”

An Environmental Report Phase I provides a visual and historical inspection to identify any potential current or past environmental issues. If issues are found a Phase II is required. Phase II includes environmental testing, sampling, and analysis.

An Environmental Assessment answers the question “Are there any potential dangers or remedial costs from former uses of the property?”

A Building Condition Assessment describes the structural components (roof, walls, etc.), interior components (plumbing, electrical, etc.), and exterior components of the building, identifies any issues or deficiencies, and projected costs of remedying them. A Building Condition Assessment answers the question “What are the hidden costs of this property going forward?”

Remember, not all of this information will be requested for every application, but if it is requested, you will know why and the importance of the information it provides. Happy property hunting!

What is an RRSP?

Written By: Aviso Wealth

What is an RRSP?

A registered retirement savings plan (RRSP) is a special kind of investment account designed to help you save for retirement. It is registered with the Government of Canada. You can contribute funds to an RRSP for yourself, and you can also contribute to an RRSP for your spouse or common-law partner. Your contributions to an RRSP are tax deductible and can be used to reduce your tax.
You can use the contributions to purchase investments, and the gains and income generated from those investments are not taxed as long as the funds remain in the plan. However, withdrawals from your RRSP are treated as taxable income

What is a self-directed RRSP?

With a self-directed RRSP, you have the freedom to oversee the investments in your RRSP. You can make all the decisions about which investments to buy or sell, and manage your account when it’s most convenient for you.

What types of investments can I hold in an RRSP?

You can hold a wide range of investments within an RRSP, including stocks, ETFs, mutual funds, bonds, GICs, and cash.

How much can I contribute?

There are limits to how much you can contribute each year to your RRSP or to your spouse’s RSP. The maximum allowable contribution for the 2024 taxation year is: $31,560. Your allowable contribution room is the lower of:
• 18% of the earned income reported on your tax return for the previous year
• The maximum annual contribution limit for the year, which is set by the government
• The remaining limit after any employer-sponsored pension plan contribution
• You can carry forward unused RRSP contribution room since 1991.


To find out the exact amount you can contribute this year, as well as your carry-forward contribution room, check your most recent Notice of Assessment from Canada Revenue Agency (CRA), or log in to your online account with CRA.

Is there an annual deadline to contribute?

In order to be eligible for an RRSP deduction in a specific taxation year, you can make contributions anytime during that year, or up to 60 days into the following year.

How long can I contribute?

You can contribute to your RRSP until December 31 of the year in which you turn 71. After that, you must withdraw the assets, convert them into a registered retirement income fund (RRIF) or purchase an annuity.

When can I start contributing?

There is no minimum contribution age, but you must have earned income reported to CRA. The sooner you start contributing to your RRSP, the better, in order to take advantage of the power of compounding.

Mutual funds are offered through Credential Asset Management Inc. and Qtrade Asset Management (a tradename of Credential Asset Management Inc). Mutual funds and other securities are offered through Qtrade Advisor and Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.
Aviso Wealth Inc. (“Aviso Wealth”) is the parent company of Credential Qtrade Securities Inc. (“CQSI”), Credential Asset Management (“CAM”), Qtrade Asset Management (“QAM”) and Northwest & Ethical Investments L.P. (“NEI”). NEI Investments is a registered trademark of NEI. Any use by CQSI, CAM, QAM or NEI of an Aviso Wealth trade name or trademark is made with the consent and/or license of Aviso Wealth. Aviso Wealth is a wholly-owned subsidiary of Aviso Wealth Limited Partnership, which in turn is owned 50% by Desjardins Financial Holdings Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.

Am I Retirement Ready?

Written by: Marc Pranger – RIS, QAFP™ | Wealth Management Advisor | Mainstreet Credit Union |
Credential Asset Management Inc. | Chatham

As a financial and wealth planner I am frequently asked the question “am I retirement ready?” Every time I’m asked this, I wish I could offer this person an easy answer. Unfortunately, it’s not as straightforward as a specific dollar amount or age that makes you automatically “retirement ready” – it truly differs person-to-person. A big consideration though as to when financially you may be ready to retire is your lifestyle and how much it costs. More specifically, how you plan to live out and enjoy your retirement years.

If you have the travel bug and want to see the world, you very likely need a different amount saved for your retirement compared to someone looking to spend their golden years on hobbies like reading or spending time with loved ones.

Despite not being able to provide a ‘one size fits all’ approach and answer, I do have a solution. It involves capturing a snapshot of your current pre-retirement spending. By taking a moment to understand what you spend on your current lifestyle, you can then remove items that you plan on no longer paying for once retired (i.e. mortgage or student loans, work related expenses, childcare costs, etc.) and add in the expected costs that will be part of your retirement like that travel fund, golfing or other recreation costs, hobbies, in-home support, etc.

Upon completing your list, you will have a good idea of the amount you will need to spend to live your ideal retirement life.

In retirement, your income may come from multiple sources – not just your personal savings. You might have a pension with your employer, and you may also qualify for annual retirement income dollars from the government via the Canada Pension Plan (CPP) and Old Age Security (OAS). As you plan for retirement it is important to review your retirement income sources and the amount each will provide you. From there, we can calculate the surplus or shortfall between your retirement income and the amount you will need to spend to live your ideal retirement life (while factoring in inflation that will occur over the years).
To assist in determining your retirement income surplus or shortfall, a helpful tool you can use at home is Mainstreet’s Retirement Planning Calculator found on our website.

If you are wondering if you are retirement ready, connect with a Mainstreet Advisor. We can assist you with creating a savings and financial plan to achieve your goals, prepare you financially for the retirement you envision, provide a second opinion on existing investments, and discuss different product solutions that are the right fit for you and your goals from RRSP’s and TFSA’s to virtual wealth and online investment solutions. Take the first step today to prepare for your journey of tomorrow.

What is an RDSP?

Written by: Delia Terpstra | Wealth Management Advisor | Strathroy Admin

An RDSP is a Registered Disability Savings Plan that is intended to help parents, guardians and qualifying participants save money for the welfare and financial well-being of someone with a disability. 

How does it work?

An RDSP is a tax-deferred savings vehicle that allows the holder to invest up to $200,000 over the lifetime of the plan. The federal government will match anywhere from 100%- 300% of your investment depending on the investor’s household income, or the income of the beneficiary if they are over 18 to a maximum yearly amount.

Simply opening an RDSP can help to qualify you for $1000 annually paid to your RDSP, depending on your income.

Who can open an RDSP?

To open and RDSP you must qualify for the disability tax credit (DTC).

Other requirements for eligibility include;

  • Canadian resident at the time the RDSP is open
  • Under the age of 60 (unless transferring from another RDSP)

Am I eligible to receive grants?

In order to be eligible to receive government grants you must meet the following criteria;

  • You must be under the age of 49
  • You must be a resident of Canada
  • You must have a social insurance number
  • You must be eligible for the Disability Tax Credit (DTC)
  • Up-to-date filing of your tax return. If under the age of 18, parents or guardians must file their income tax returns for the past 2 years and future years

How will an RDSP affect my Ontario Disability Support Program?

At this time the RDSP payments do not affect your eligibility or the amount of money you receive for income support from ODSP.

See website regarding this: Financial eligibility: Treatment of income (gov.on.ca)

How much grant money in available?

The maximum grant you can receive through Canadian Disabilities Service Grant (CDSG) is $70,000 up until the end of the year the beneficiary turns 49.

The maximum Canada Disability Savings Bond (CDSB) you can receive is $20,000.

For more RDSP information visit this website: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-disability-savings-plan-rdsp/canada-disability-savings-grant-canada-disability-savings-bond.html

How can I set up an RDSP?

To set up a RDSP, you can book an appointment with one of our knowledgeable Credential Asset Management Inc. Wealth Management Advisors at Mainstreet here.

Mutual funds are offered through Credential Asset Management Inc. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

Top 10 Things to know about Mainstreet Online Banking

By: Jodi Ritzer | Member Experience Supervisor | Chatham

Get the most out of our online banking service with the following top 10 tips and tricks:

1. To be able to see the password you have entered, you can click on the ‘eyeball’ icon on the right side of the Personal Access Code field.

2. To set up a new debit card on your mobile banking app, open the app, click “log in” followed by “log into a different account” in the bottom left and fill in the account details. Be sure to check the remember me box for quicker access to this new log in. You can also delete any existing logins by selecting “manage login profiles” and clicking the trash can beside the account you wish to delete.

3. Did you know that you can deposit a cheque to your account by using our mobile banking app? Simply login to the app, touch Deposit on the home screen and follow the prompts. Note: Your cheque may be held for up to 5 business days after depositing. PRO TIP: write ‘deposited by phone’ and write the date on the back of the cheque so you don’t accidentally try to deposit it again.

4. If you have to pay business taxes (i.e.: current source deductions, corporate income tax, etc.), expand the ‘Payments’ menu and select Pay Business Taxes. You can remit and pay all in one spot!

5. Protect your account! Set-up Alerts so you can monitor your account access! In online banking desktop, click on Messages and Alerts, and select Manage Alerts, and on the Mobile Banking App, swipe left on the home screen and touch Alerts and then touch Manage. You can set alerts so you are notified immediately if someone tries to login to your account, sets up a new e-transfer recipient, sets up a new payee to your bill payments, and more!

6. You can add a new payee to your bill payments listing. Under the Payments heading, select Add/Delete Payees, then select Add Payee. You can search the company by name, or enter the type of business for a list of suggestions.

7. If you need to view account transactions older than 6 months, you can do this by clicking on My Accounts, then selecting View e-Statements. Select the year and month of the statement you wish to view. The information is available for 7 years!

8. Tax Receipts. Are you tired of waiting for your tax receipts to come in the mail? They are available online! Click on My Accounts, then select View e-Documents and select the receipt you want to view and/or print.

9. You can re-name your accounts! Are you saving for a car, a wedding or something else. You can label your accounts so you know which one is which! Click on My Accounts, then Rename Account, select the account you want to Rename, and label it!

10. Downloading your transactions to a bookkeeping program is easy! Go to My Accounts, View Account Activity, select the account you wish to download, then go to Export to… on the right side of your screen and select from the drop-down list of programs.

11. BONUS!!! You can get your account information for direct deposit or pre-authorized debit online! Click on the account for which you wish to get the information, it will then show on the top right side of your screen under the heading Account Details and will include your transit number, institution number and account number!

If you are looking for more helpful tips and tricks, visit a branch or speak with the team at Mainstreet Credit Union. We are here to help!

A Savings Strategy: Pay Yourself First

Written by: Lynda Edington | Financial Advisor | Sarnia (London Rd.) branch

You try to set aside money every paycheck for your savings but by the time you pay your bills, buy groceries, gas and go out for dinner a few times it feels like there is nothing left to save. Maybe it’s time to try a different approach.

First, know where your money goes.

Track your spending- whether it is using a spreadsheet, writing it down, or reviewing a few months of bank statements. This activity will help you understand where your money is going and may open your eyes to the real expenses of your day-to-day.

After reviewing your budget, the next step would be to set your financial goals…

Determine what you would like your money to provide for you. This could be the goal of early retirement, a family trip, building your emergency savings, the purchase of a new boat, or car, or other important life goals. Having a budget and measurable goals will help you know where you are going to allocate your paycheck.

Once these two steps are complete, we move into implementing your plan through a strategy we like to call “paying yourself first”.

Essentially, paying yourself first is a reverse budget. Which means you are treating your own savings like it’s a bi-weekly or monthly bill. Instead of saving what you have left, you are saving a specific amount first so that your financial goal can be reached in a set time frame.

For example, if you bring home $4,000.00 monthly, automatically save 15% ($600) towards savings. This will leave you $3,400.00 to pay your bills and make your goals a reality. The strategy of savings makes saving easy because you are no longer spending any time figuring out if you have any money left to save. Instead, you can be confident you are getting closer to your goal – as long as you stick to your budget.

We realize that paying yourself first or setting up a reverse budget may be tough, so we are here to help! The expertise of a Mainstreet Advisor can help get you on track and closer to where you need to be. We can meet with you to review your different goals, how to make them work best for you, and how investing may make them achievable sooner than you think. We can also help you set-up automatic withdrawals from your account every pay going to your savings so your pay yourself first savings happens automatically.

To get started reach out to a Financial Advisor at Mainstreet Credit Union today by calling us or book a meeting online.

Building a bright financial future for your child

Written by: Joan Battram & Linda Kew | Member Service Representatives | Parkhill Branch

When a child is born so many responsibilities come with raising this child. One thing that can easily be taken care of is their education. Opening an RESP (Registered Education Savings Plan) could be one of the smartest decisions that you will make, however, there are a few details that you’ll want to understand prior to doing so.

An Education Savings Plan or Registered Educations Savings Plan (RESP) can help parents, family and friends save towards a child’s future post-secondary education.  At Mainstreet Credit Union we can assist you in not only understanding what an RESP is, but more importantly, how to personalize it to suit your needs.

Here are a few important tips that you’ll want to consider before opening an RESP:

Invest Early

The earlier you start, the less you would need to contribute each month. Invest early and watch the RESP grow with interest over time along with your kids.

Save What You Can Afford

The amount you save will be unique to you. Remember every little bit is a step in the right direction!

Be consistent

Set-up a monthly automatic contribution, even if it is a small amount, this way the savings happens without thought given how busy we all are.

Make it Flexible

You have options for education savings. Perhaps you want to look at a TFSA (Tax Free Savings Account) which can be withdrawn tax free for any purpose and does not have to go towards education. Or perhaps an RESP family plan vs an individual plan to offer flexibility.

Gain More Than Just What You Put In

The government will add 20% annually to the first $2500 contributed, a $500 bonus every year!

Know Your Facts

The lifetime contribution limit for each beneficiary of a RESP plan is $50,000

Taking the first step of opening an RESP, or other savings plan for your child’s education, can help your child have more choices in life and set them up to achieve financial independence. It is never too late to start. Encourage children to save their earnings of cash gifts from family to add to the plan and start showing them how to get their money working to maximize opportunities for their future.

Note: Parents aren’t the only ones who can open an RESP for a child. If you have a grandchild, niece, or nephew, you can open an RESP for them. In fact, anyone can get an RESP for a child. You could even open an RESP for one of your friends’ children if you’re feeling generous!

Reach out to Mainstreet today to get started! Book a meeting with a Mainstreet advisor today.

Building a Financial Plan

Written by: Marc Pranger |Wealth Management Advisor | Credential Asset Management Inc. | Chatham branch

Financial planning is so important for our future, yet many of us find it to be a difficult process with not understanding the necessary steps to take or how to wade through the financial jargon. Taking care of our financial health is as important as taking care of our physical and mental health. Much like a coach creating a daily training plan for their team, we are here to create a financial plan that builds on your current scenario and guide you in realizing your goals and dreams.

What is a financial plan?

Simply put, a financial plan keeps you on track to achieving your needs, wants, and visions.  Having an expert who is invested in you is the key to success. At Mainstreet Credit Union, our advisors can help you determine your goals, and guide you on which goals to prioritize and when. Ensuring they are all specific, measurable and obtainable can help you navigate a budget, and find funds to put towards your goals. We want to help you ensure that your greatest asset- your income, is well managed and working for you.

What tools are right for me?

We are here to help educate and advise on the tools at your fingertips and how to use them to your advantage. Tools like Registered Retirement Savings Plans (RRSP) and Tax Free Savings Accounts (TFSA), GICs, Mutual Funds*, and even do it yourself online brokerages* are among some of the products we can discuss with you. We will review their pros and cons as well as their tax efficiencies in regards to your unique financial plan.

Risk tolerance

This refers to how much market change and fluctuation someone is comfortable with for their investments. There are multiple factors that help us determine your individual risk tolerance and we then work closely with you to select investment options that suit your risk level, investment time frame, and ensure that you continue to maintain your lifestyle and ensure that your investment choices don’t keep you up at night.

Wealth Management Advisor’s can also assist you in breaking through barriers of tough conversations with your immediate and broader family, such as: estate planning and what happens if you were to pass away.

To get started on your financial planning journey book a meeting with one of Mainstreet’s Wealth Management Advisors online or call your nearest branch.

*Online brokerage services are offered through Qtrade Direct Investing, a division of Credential Qtrade Securities Inc. Qtrade and Qtrade Direct Investing are trade names and trademarks of Aviso Wealth Inc. and its subsidiaries.

Mutual Funds and related financial planning services are offered through Credential Asset Management Inc.