Newsletter February 2020-2

I apologize for frequent letters but there is new information that requires clarification.

1. STRESS TEST will be less strict starting April 6th, 2020.

2. How we can help you in 2020.

2.1. Savings account with a 3.3% interest. How to submit an application to open such an account?
2.2. All questions about MORTGAGES that may possibly come up.
2.3. Insurance – different options and plans including home and auto insurance. Full details below.
2.4. Be ready for retirement, strategy on preparing for this stage of life. How not to lose what you have accumulated and increase it?
2.5. Investing in private mortgages or obtaining private loans with property as an underlying collateral. How interesting and risky this may be?
2.6. RRSP, TFSA, RESP, investment. Check below who we work with.

Now in a little more details:

1. STRESS TEST will be less strict starting April 6th, 2020.

Just last week there was an announcement that the long awaited reduction in Stress Test is likely coming soon. Starting April 6th, 2020 the Stress Test calculation will be done differently.
Bank interest (posted rate), that serves as the basis for the calculation of Stress Test, will be calculated as follows – average rate of all banks on a fixed insured 5-year mortgage offered on that specific week, plus 2% (insured mortgages are typically mortgages with down payment less than 20%).
If we look at what the Stress Test rate would look like today, it would be 4.89%, the banks are giving insured mortgages with an average rate of 2.89%.
If we add 2% we will get 4.89% which is 0.30% lower than the current rate of Stress Test (5.19%).
This decrease in qualification rate can certainly help in specific situations. How it will really work is yet to see as the level of Stress Test recalculated weekly with the changes to the offered mortgage rates at that time.
Unfortunately, this may result in rate that is higher than the current 5.19% (posted rate). You can find some answers to questions that are currently available in Canadian magazines by visiting below link https://www.canadianmortgagetrends.com/2020/02/questions-new-stress-test-rate-answers/.
I would like to mention that there are already talks that the next point of discussion will be the 2% that gets added to the average interest rate. If the 2% gets decreased, this will be much more effective from the perspective of ability to purchase Real Estate than just the new approach to calculating Stress Test (affordability ratio). We will keep you updated.

2. How we can help you in 2020.

Why did I write 2020? Probably just because today is year 2020 but of course we are always here to assist you and plan to be helpful for many years to come…
We can be really resourceful and are always ready to help you. Often people are just not fully aware how our office can assist in many different ways.

2.1. Savings account with a 3.3% interest.

My sincere apologies but the opportunity to open a savings account with an interest of 3.3% has been moved to April of 2020. The bank has introduced this program for a limited number of agents as a pilot and discovered that the project requires some upgrades, availability of this program to the public has been postponed to April of this year. I have a complete section for our website that has not been activated yet, I have to follow instructions from the bank. I promise this account will be very interesting to you – first, this is the highest rate offered on the market, second, it will be very easy to open, you simply complete an application form on our website and enter information of your already existing account. New bank sends two small amounts (pennies) to your current account, you accept it thereby activating your new account. No minimum, no time frames, this is not a promotional rate, there is just a maximum amount per person of $500,000.

2.2. All questions about MORTGAGES that may possibly come up.

If you need a mortgage – purchase, refinancing or a simple renewal, we will assist you in obtaining loans in various situations. We work with big and small banks, credit unions, Lenders A and B. We offer really competitive rates on mortgages for your particular scenario.

Planning to purchase a property for the first time and do not have enough money for down payment? Talk to me and I will likely be able to find a solution to your situation and help you make the purchase sooner.

Debt consolidation – refinancing property, why not if it is beneficial? Very often it is important to stop paying the banks high interest on debts like credit cards and lines of credit. You can combine all your debts under one low interest. We can help you calculate the benefits of such transaction.

Looking for a combination of a mortgage and a line of credit?
We can assist in processing HELOC and the credit line can be there as reserve fund.

If you are coming to the end of your mortgage term, we can offer conditions that are better than your bank offers. New bank will assume the legal costs as well as appraisal costs. Please pay attention on how contacting our office ahead of time can help you save money over the next couple of years – http://www.totrov.com/en/mortgage-en/manage-your-mortgage/. Those that chose to register on our website on their own, also automatically enter a draw of 5 prizes every 3 months.

2.3. Insurance – different options and plans including home and auto insurance.

Insurance in Canada is an everyday aspect of our life – all financial institutions offer insurance when giving a mortgage, line of credit and credit cards, you are even offered additional coverage through your employer. We can offer contracts with better conditions and with monthly payments lower than those offered to you. High monthly payment is the issue? No problem, there are coverages for just a few dollars. Most important, as an expert with a 23 year experience, I can help you find the appropriate coverage based on your needs and abilities. You can calculate costs of different coverages using the following calculator https://www.totrov.com/en/insurance-en/insurance-price-calculator/.

Unique insurance program in case of serious illness, also offering ability to save for retirement. If an individual does not use the coverage, after a certain period that person would be able claim back the saved amount (premiums paid to insurance company).

Medical Insurance for visitors and new immigrants, as well as insurance to obtain “Super Visa”. Obtain the insurance prior to your guests’ arrival, and they will be covered during the flight as well. Existing health conditions can also be covered if needed.

If there are no benefits at work, Travel Insurance is a necessity for any trip.
The cost is only $41.01 per week for a family of 5 people, where each parent is under the age of 54; covers treatment of any illness of any family member during the trip. If you know how such insurance coverage works and you are under the age of 60, you can purchase the insurance at our website: https://www.totrov.com/en/insurance-en/travel-insurance/.

If you are self-employed or own business, you should consider obtaining the coverage that is typically offered to “full time” employees. Just consider what would happen if a self-employed individual has an even minor injury and would be unable to work for a period of time. Disability insurance covers income lost if you are unable to attend work for medical reason and your “net income” is not important, there are coverages without confirmation of income.

We have an arrangement to assist our clients with questions regarding insuring your auto, home, belongings and businesses (Liability Insurance and Builders Risk Insurance) with Michael Totrov, experienced licensed insurance broker. He works with a big brokerage “Sound Insurance” that has been in the market since 1940. Brokerage with a large amount of contracts makes for better chances of Michael being able to find lower premiums for your unique situation. His e-mail miket@soundinsurance.ca
Phone: Bus. 416-987-7230, Cell. 416-302-3306, hours of operation 1 p.m. to 9 p.m. (M-F).

2.4. Be ready for retirement, strategy on preparing for this stage of life.

How to obtain full pension with all the supplements in the first few years after retiring at age 65, if this was refused by the Government based on your previous years income?

How to increase income in retirement if you own a property?
We have to appreciate that the value of Real Estate in Canada increases, slow or fast, but increases. Let’s look at the increase in value as a possible reserve pension fund. You can find out on how this would work by reading the following article on our website https://www.totrov.com/en/art-2017-02-1-2/.
Ideal scenario for retirement age is explained on our website https://www.totrov.com/en/mortgage-en/reverse-mortgage/. There are many rumours and myth regarding the Reverse Mortgage. The above link offers a comparison of two financial products: Reverse Mortgage and Home Equity Line of Credit (HELOC). Which one is better, in what situation? All of this is covered on our website.

2.5. Investing in private mortgages or obtaining private loans with property as an underlying collateral.

Investing in private mortgages with real estate as collateral. First or second mortgage through two lawyers, through a brokerage, all expenses covered by the other side. Equity line of credit can be effectively used and pay dividends.
Sometimes something happens in life that there is a need for financial help to come out of a tough situation. If you own a property, it is very possible that to come out of such situation you simply need to get consultation and we are able to offer it to you.

2.6. RRSP, TFSA, RESP, investment. Check below who we have the ability to work with.

I will help you understand how beneficial will the RRSP pension program be for you, will this plan get in the way of obtaining social benefits at retirement age and, just in general, what you can expect upon retirement. Of course we can open an RRSP in various financial institutions.

Government in Canada helps families that think about the future education of their children. On contributions, even smaller ones, Government can add up to 40% of your contribution amount (depending on the size of the contribution and the household income). There is a company that will, in addition to Government Grants, add up to 15% bonus to your contributions depending on the child’s age.
On our website www.TotrovRESP.com you can compare all available RESP options. The thing is that many are confused and are under the impression that there is only one such program – no, there are many, and they all offer different conditions. Since I hold various licenses I am able to offer a few different education savings programs. I prefer the plan that has no requirements on length of education, that does not place importance on the profession chosen by the child or when the child decides to attend school, as long as the child attends any school for 3 months within the 35 years period of opening the plan.

Investment of large or small amounts for a long term (RRSP, LIRA – plan after leaving employment) or not. We can assist you in this direction as well.

TFSA, GIC, simply Savings Account or Chequing, with interest higher than big banks offer.

We hope to hear from you or see you soon.
Our office is open 9 a.m. to 9 p.m. and Saturdays by appointment.

Serguei Totrov
Financial Advisor, CFP, CLU, EPC
Mortgage Broker, AMP
TOP – 75 Mortgage Broker in Canada
in 2015, 2016, 2017, 2018
416-222-0533
www.totrov.com

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