Refinancing your home, choosing to be proactive in reactive times.

Refinancing your home, choosing to be proactive in reactive times

 

With uncertain times ahead we are receiving a lot of calls regarding taking equity out of people’s residences.  Some people are doing this as they are concerned about being off work for an extended time, others are using this time to refinance all off their debt and putting it into one simple payment, while there are people just looking to take advantage of these new low rates to lower their interest on their mortgage.

If you are in the group of people that are concerned about their employment I would suggest doing this before any changes at work as lenders will not lend to anyone who is not working.   

The government has set limits on the maximum you can borrow against your house and the chart is below

This type of financing that Baars received the loan amount into as much as 80% of the value of their house. Lenders allow these homeowners to pay for the refinanced mortgage for a long period of time, and their interest rates are generally lower compared to the rates of other types of personal loans.

Appraised value of your home $300,000
Maximum loan you may get x 80%
Loan amount based on appraised value of your home = $240,000
Less balance you owe on your mortgage – $175,000
Refinancing credit limit $65,000

There are many valid reasons for you to refinance your home, and there are certainly several advantages that come with doing so if accomplished at the right time. We believe the right time is now, to successfully access your home’s equity and to secure another loan with more favorable terms while providing yourself with emergency funds in uncertain times.

Contact our Brokers as Browne Mortgages + More to talk about refinancing your home today!

The Interest Rate Spring War Has Arrived, Lower Rates to Come

Hi Abbotsford, Chilliwack and Mission mortgage clients! We have good news for you. Rates appear to be dropping further, therefore this may be an opportune time to renegotiate and secure a mortgage. If you’ve considered buying, refinancing or renewing your mortgage, we suggest giving our team a call so we can look at your current mortgage and see if it’s worth making a move.  Here are a few reasons why we believe now would be a good time to review your mortgage or for home buyers, a good reason to consider purchasing while rates are at historical lows.

  • A shifting economy will push the BOC (Bank of Canada) to lower interest rates further
  • Negative growth in demand over the last two quarters
  • The BOC has recently moved to a more neutral bias, rather than tightening
  • US Federal Reserve has entertained the idea to make a cut mid way through 2019, Canada generally follows
  • Recessionary conditions in other parts of the world will likely influence Canada

We have a seasoned mortgage consultant on our team who specializes in placing those looking to refinance, in a strategic mortgage plan during the spring rate wars that take place every year. We are prepared to work hard on your behalf because feeling a little more financially free, or paying off your mortgage sooner, is a priority to each one of our team members.

Give us a call for your complimentary mortgage review.

Source: https://www.mortgagebrokernews.ca/news/boc-will-likely-cut-interest-rates-next–economist-255388.aspx

Capital Gains Tax – 3 Facts You Should Know

Capital Gains Tax – 3 Facts You Should Know

In the heat of the housing market, the media drew a lot of attention towards real estate “flipping” in BC. Buyers and sellers were purchasing properties and reselling for a profit, not before long the government implemented policies that required a lot more disclosure throughout the buying and selling transaction as well as distinguishing an individual’s primary residence. The government wanted to make it easier to track properties turned rentals, recreational homes or even a little of both. As a result, they hired an undisclosed number of works at the CRA (Canada Revenue Agency) to investigate these “tax cheats”. Below we’ve disclosed the top 3 facts you should know about Capital Gains Tax, #3 could save you thousands!

 

 1. What is it?

Capital gains tax is based on an increase in value of real estate or an investment. It applies to real estate that is not considered your primary residence and to stocks held in a non-registered investment account. This “gain” may be short term or long term and is not realized until the asset is “sold”. Capital gains tax is applied when the investment or real estate is worth more at the selling point than it was at the time of purchase.

*Capital Gains Tax must be claimed on income taxes and paid during the income tax year you’re filing

2. How is it calculated?

The total net gain is divided by 2 (50%) and then added to your income. It can also be split between spouses if the asset it jointly held. The gain is calculated at the time it’s sold and is added onto the asset owner(s) total income for that year.

Example:

John and Jane bought a rental condo in 2011 for $200,000 in Abbotsford, BC. In 2017 they decided to cash in on their gains and were able to resell their rental property for $400,000.

Sale price 2017: $400,000

Deduct the following:

  • Original purchase price: $200,000
  • Legal and realtor fees (from original purchase AND resale): $20,000
  • Property transfer tax (only if it was not deducted on 2011 income tax)

Total deductions: $220,000

Profit: $180,000

Capital gain: $180,000/2 (50% capital gain) = $90,000

*Since the property was purchased equally between John and Jane, the total capital gain will be split between the both parties.

John’s income in 2017: $90,000 + $45,000 = total income in 2017: $135,000

Jane’s income in 2017: $90,000 + $45,000 = total income in 2017: $135,000

Per asset owner: $45,000 x 36.5% (new tax bracket) = $16,425

Taxes owing for each asset owner = $16,425

3. How can you avoid it?

Putting money into a Registered Retirement Savings Plan (RRSP) can help you avoid paying this hefty tax.

Using the example above: Assuming they have the contribution room to do this, if John and Jane invest $45,000 into their own individual RRSP account, they would avoid paying the entire tax hit while still having it available at their disposal and best of all…tax free.

This is an excellent way to jump start your retirement savings all while getting out of having to the pay the government a hefty chunk of change.