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98.1 Free FM Better Tips

Better Financial teamed up with London’s 98.1 Free FM to provide listeners with daily financial tips that will help them save money and achieve their financial goals sooner.

All of our Free FM tips are posted below. You can listen to the tips or get more information on each tip below. Keep checking back as more tips are released.

For further information, or if you have any questions, please feel free to contact us and one of our professionals will be happy to help!

Better Tips

firsttimebuyers_smallFirst Time Home Buyers
Find out how you can save money when buying your first home.

consolidateDebt Consolidation
Save thousands in interest and monthly payments by turning multiple high-interest debts into one low-interest payment.

unlockpensionUnlock Your Pension
Find out how you can access your “locked-in” pension from a previous employer.

home_consolidationHome Equity Lines of Credit
Find out how you can get a line of credit at a low interest rate.

piggybankTax Free Savings Accounts
Find out how to get the most out of a TFSA.

Incentives for First Time Home Buyers

The Government of Canada offers two major incentives for first time home buyers. The Home Buyers’ Plan (HBP) and the First-Time Home Buyers’ Tax Credit (HBTC) can help you save money when buying your first home. Let’s find out a little bit about each of these incentives and how they can help.

1. Home Buyers’ Plan

The HBP allows you to withdraw up to $25,000 from your RRSPs to buy or build a home for yourself or a related person with a disability. To qualify, you must be a resident of Canada purchasing your first home. You also qualify if it has been at least 4 years since you last owned a home. Here are a few more details of the HBP:

  • If you are buying a home with a spouse, they may also withdraw up to $25,000.
  • The money being withdrawn must have been in the RRSP account for at least 90 days.
  • You have up to 15 years, starting the second year after withdrawal, to repay the RRSP. Your yearly repayment will be 1/15th of the amount you withdrew. If you do not contribute to your RRSPs for one or more of these years, the amount is added to your income at tax time.
Why Use the HBP?

The HBP is one of the only ways you can take money out of your RRSPs tax-free. It is a great way for people with RRSPs to put a downpayment on a new home.

But what if you don’t have an RRSP? The HBP can still benefit you! Many people planning to buy their first home open up an RRSP account to start saving for their downpayment. By putting their savings into an RRSP account, they receive a credit/refund at tax time. This can either be added to their savings or used to help pay for other expenses.

For more information see the Canada Revenue Agency’s Home Buyers’ Plan webpage.

2. First-Time Home Buyers’ Tax Credit

This incentive, part of Canada’s Economic Action Plan, gives first time home buyers a $5000 tax credit for the year in which they buy their first home. This credit can be shared or split with a spouse but cannot exceed $5000 total. This tax credit is applied to your income tax return, which means you can receive up to $750 worth of tax relief from the government.

Like the HBP, to qualify for this incentive, the home you purchased must be used as your principal residence. Simply mention to your tax preparer that you bought a qualifying home during the year and they can help ensure you receive your credit.

The Home Buyers’ Plan and First Time Home Buyers’ Tax Credit are great incentives offered to first time buyers by the Canadian Government. If you are interested in finding our more, please feel free to Contact Us and we will be happy to help.

What is Debt Consolidation?

“Debt Consolidation” is a term we often hear on radio or TV advertisements. Unfortunately, many of these advertisements do not explain very well exactly what debt consolidation is. The purpose of this article is to clear up some of the confusion around debt consolidation and to give you an understanding of how it can help you save money while paying your debts off sooner.

Turning Many Debts into One Better Debt

The concept behind consolidation is to take multiple high-interest debts–such as credit cards, lines of credit, auto loans, etc–and merge them into one low-interest debt. What this allows you to do is reduce the overall monthly payments and interest you are paying. By consolidating, you are able to free up monthly income which can then be used to accelerate debt payments, pay for other necessities, increase your retirement savings, or simply create more breathing room at the end of each month.

Let’s take a look at what debt consolidation looks like in table form (click image to enlarge):

Example of debt consolidation

Example of debt consolidation

As you can see in the table, this client’s multiple debts on the left have been consolidated into one debt on the right. This alone reduces their monthly payments by $1243.79 per month. On top of this, the new low interest rate means that they will also be saving $33,000 in interest over the next five years. You can see how this simple strategy can dramatically improve your financial situation.

 

Using your mortgage to consolidate

Consolidate debt into your mortgage

Consolidate debt into your mortgage

Due to the historically low interest rates being offered these days, your mortgage is usually the best way to consolidate debt. By refinancing your mortgage, you can build your high-interest debts into your low-interest mortgage and realize the benefits outlined above. Even if your mortgage is not maturing in the near future, it may still make sense to refinance now to take advantage of the thousands of dollars in interest you can save.

Common Questions and Answers

What does it mean to “refinance”?

Simply put, refinancing is when you re-borrow money you have already paid towards your mortgage. People often do this as a cost-effective way to borrow money after having paid off a portion of their original mortgage.

Will debt consolidation hurt my credit?

Debt consolidation should not be confused with a consumer proposal or bankruptcy where your credit is damaged for a period of time afterwards. Debt consolidation is simply a money management strategy. In fact, by better managing your debt, consolidation often improves your credit score.

How much can I consolidate?

If you own a home, you can refinance up to 80% of its market value. For example, if the market value of your home is $200,000 you can borrow $160,000 ($200,000 x 0.80). Subtract the amount you currently owe on your mortgage and you will be left with the available “room” you have left to consolidate other debts. For example, if your current mortgage balance is $100,000 you can consolidate up to $60,000 worth of other debts into your mortgage.

Why haven’t I heard of this before?

As mentioned at the beginning of the article, there is a lot of confusion about what debt consolidation actually is. This is understandable since banks do not normally promote this idea; they would rather see their clients take out lines of credit–which charge higher interest rates. Fortunately, people are becoming more aware of their options and are seeing that debt consolidation is a great way to reduce debt faster and free up extra cash each month.

Debt consolidation is a great way to minimize your monthly payments, save thousands in interest, pay down your debt sooner, and reach your financial goals faster. If you are interested in finding our more, please feel free to Contact Us or fill out our no-obligation Application if you would like us to review your details and contact you directly.

Buying a Home: Neighbourly Advice

Purchasing a home can be a daunting process for first-time buyers. Below, Kate shares her family’s experience of buying their first home.

Key Topics Covered:

  • Renting vs. Buying
  • Talking to a Mortgage Professional
  • Monthly vs. Bi-weekly payments
  • Buyer Tips