Newsletter May 2021
Please read the latest news.
1. New Stress Test is coming into effect but there is an option to obtain a pre-approval and receive mortgage after June, using previous rules.
2. Manulife Bank is offering 2.00% return on investment when opening a new savings account (Advantage Savings Account).
3. Improvements to First Time Home Buyers Incentive program.
4. Federal budget for year 2021.
Taxes on luxury vehicles, planes and yachts.
Increasing pension for those over the age of 75.
Additional weeks for COVID-19 Recovery Benefits.
Tax Treatment of COVID-19 Benefit Amounts and other.
5. World rating of best banks evaluated by clients.
Manulife Bank ranks higher than RBC, Scotiabank, CIBC BMO or TD.
Now in more detail:
1. New Stress Test is coming into effect but there is an option to obtain a pre-approval and receive mortgage after June, using previous rules.
As of June 1st, 2021, OSFI – Office of the Superintendent of Financial Institutions has passed a decision for a stricter stress test for uninsured mortgages. Current qualification rate for all situations is 4.79%.
Let me remind you what a stress test is.
If at the time of renewal of your mortgage in the future the rate increases, and you are not able to meet your debt obligations, this will be a problem for everybody. For that reason banks qualify you at a higher rate, and if you are able to afford payments at this higher rate based on a specific formula, they give you a low mortgage rate, currently offered in the market. This higher rate is the Stress Test.
This Stress Test is what is going to be increased to 5.25%.
Last time I detailed how the new rate will affect the overall ability to purchase.
If you are up for a renewal of your mortgage in the next few months and you believe that the new level of stress test can affect you, call us, we will be able to do a pre-approval and qualify you under the current rules for the next few months.
2. Manulife Bank is offering 2.00% return on investment when opening a new savings account (Advantage Savings Account).
Interest on savings accounts today varies between 0.05% and 0.3%.
At the same time, some banks have started offering very attractive investment rates for a few months for new clients (promotional rates). Existing accounts with these banks, unfortunately, do not qualify for these benefits.
Manulife Bank has made an interesting offer: for the next four months the bank will be offering 2.00% annual interest on new savings accounts, opened prior to June 18th, 2021.
You can open a new account with Manulife Bank and receive the offered rate of 2.00% for the 4 months after opening the account at the following link.
https://client.manulifebank.com/edo/#/productCatalogue/BANK_ID=MNL&LANG_ID=001&REF_ID=082609
Of course, after the promotional period, the interest will be reduced to the current standard 0.15%, but I am certain we will be able to find other interesting offers as soon as this promotion is over.
There is no minimum amount to open the account but there is a maximum amount to obtain the promotional rate – the amount is $250,000 and only one such account can be opened per person.
Most importantly, everything we offer does not require any expenses and all operations, even further transfer to another bank will be free for you.
3. Improvements to First Time Home Buyers Incentive program.
As of May 3rd, 2021, the government has improved the conditions of the FTHBI (First Time Home Buyers Incentive) program. Unfortunately, this program was practically impossible to apply in large cities, because the maximum mortgage had to be less than $480,000 and since this is an insured deal the value of the property had to be approximately $500,000.
Maximum allowed household income is now $150,000 (was $120,000) and maximum allowed mortgage amount can now be up to 4.5 times of income (was 4 times). So the maximum mortgage amount now cannot exceed $675,000, which is more interesting and some may be able to take advantage.
You can make proper calculation and review conditions on the government website www.placetocallhome.ca.
4. Federal budget for year 2021.
Taxes on luxury vehicles, planes and yachts.
Increasing pension for those over the age of 75.
Additional weeks for COVID-19 Recovery Benefits.
Tax Treatment of COVID-19 Benefit Amounts and other.
Year 2020 our nation did not have an official budget and at the end of April of 2021 Liberal government has announced the budget for this year.
Some points deserve extra attention, I will try to highlight them.
As of January 1st, 2022 new tax will be introduced on luxury items that are not necessities: cars and planes valued at over $100,000 and yachts valued at over $250,000. This will affect both full out purchases as well as financing or leasing such items. The tax is calculated as the smaller of two amounts: 10% of the full price or 20% of the amount exceeding the level of $100,000 or $250,000.
The government is increasing age benefits (Old Age Security (OAS) benefits) by 10 % for those who are age 75 and older on July 1st, 2022. On top of that, the same retirees will receive $500 in August of 2021 in addition to their regular pension.
An introduction of a new program, GST New Housing Rebate, which will allow a return of 46% of GST/HST when buying a new home up to the value of $350,000. The amount of refund will vary with property value above $350,000 and $450,000, but the maximum refund will not exceed $6,300. This only applies to primary residence, not rentals.
Plan to increase the national minimum wage standard to $15 per hour.
The government is also extending the public support to those effected by COVID-19.
Canada Recovery Benefit (CRB) – additional 12 weeks to a maximum of 50 weeks.
First 5 weeks the affected will receive $500, the remaining 8 weeks $300. Those that begin receiving CRB after July 17th, 2021 will continue to receive $300 per week up to September 25th, 2021. An extension will also be added to Canada Recovery Caregiving Benefit (CRCB) for 4 additional weeks, maximum up to 42 weeks, $500 per week.
All additional payments under these programs (CRB, CRCB and EI) will be announced no later than November 20th, 2021 if so is necessary.
All supplemental income from the government will be subject to tax as regular income.
If this support was received in error, it will be taxed in the calendar year it was received and will be tax deductible in the year it has been returned back.
Up to year 2023, people will have the opportunity to correct their taxes either the year the payments have been returned or the year the payments were received.
Starting in year 2022, a 1% tax will be applied to vacant or improperly used properties owned by non-residents with no Canadian citizenship.
Additional information will be added later.
5. World rating of best banks evaluated by clients.
Manulife Bank ranks higher than RBC, Scotiabank, CIBC BMO or TD.
Canadian banking customers have spoken loud and clear: Manulife Bank ranks better than all the big Canadian financial institutions.
On April 13th, 2021, Forbes magazine published a list of most popular banks in the world as perceived by the clients.The criteria included overall satisfaction with the bank and topics such as: trustworthiness, cost of service, internet service and financial advice.
Manulife Bank has ranked in this list higher than the large financial institutions of Canada, including the 5 major banks of the country (RBC, Scotiabank, CIBC, BMO, TD) and other internet banks, such as Simplii.
World’s Best Banks by Consumer Choice.
Manulife Bank continues to lead in customer satisfaction including:
- Having the #1 banking app for both iOS and Android.
- Manulife One was named Canada’s most flexible readvanceable mortgage by Rates.ca.
- The Advantage Account was named The most useful bank account in Canada by The Globe and Mail.
- Now, beating out all the other big banks according to the most important voice of all – our customers.
Financial wellbeing and health!!!
Serguei Totrov
Financial Advisor, CFP, CLU, EPC
Mortgage Broker, AMP
TOP-75 Mortgage Brokers in Canada
2015, 2016, 2017, 2018, 2019, 2020
416-222-0533
www.totrov.com
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