Navigating Rising Interest Rates

Written by: Tara Boersma

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!

The ABCs of RRSPs

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 to my RRSP?
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 2021 taxation year is: $27,830. 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 to an RRSP?
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 to an RRSP?
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 to an RRSP?
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.

A Guide for First-Time Home Buyers

Written by: Jennifer Sullivan | Member Advice Specialist | Parkhill Branch

Are you considering buying your first home? Do you feel like you have a lot of questions and are unsure about how to navigate the mortgage and home financing process?

Mainstreet advisors are experts in providing you with mortgage advice and can help walk you through this exciting time and the necessary steps when purchasing your first home.

Here are a few important first steps when considering buying your first home.

Down payment and closing costs

In Canada, your down payment must be between 5-20% of the home’s total purchase price. If you have saved 20% or more you can avoid paying mortgage default insurance. Any down-payment under 20% is subject to taxable lender protection insurance. Premiums are based on both the down payment and the size of the mortgage. Note: If your down payment has been gifted, it must be accompanied by a letter stating that. 

Another item to consider as a first-time homebuyer is government programs that are available to assist with your down payment. 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. There is also the First Time Home Buyers Incentive which offers 5 or 10% of the home’s purchase price as an addition to your down-payment. If you are interested in any government programs we can discuss this together at your mortgage appointment.

With saving funds for your home purchase in mind, don’t forget to budget and save for added closing costs. Closing costs are not a factor that initially comes to mind as a first-time homebuyer. These costs include legal fees for your lawyer, title insurance, taxes, inspections, and appraisals. Closing costs can quickly add up, so make sure to include this in your savings plan.

Pre-Approval

A great first step on your journey to preparing to buy your first home is to speak to a Mainstreet mortgage expert by booking an appointment online, visiting a branch, or speaking to a Member Experience Centre (MEC) representative.  Gather your supporting documents and bring them to your meeting. Together we’ll discuss your home-buying goal, review your financial background/credit, and determine the best price range for your income and budget that suits your needs. After the pre-approval meeting, it’s happy house-hunting! Don’t fear your Mainstreet mortgage, a financial expert will be by your side from start to finish, available for questions as you need us by email, phone, or in person.

As first-time home buyers we know this can be an overwhelming experience, don’t be afraid to ask questions or seek advice. All of us at Mainstreet Credit Union are here to help our members and you realize your home-buying dream.

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.