Reduction in RRIF Minimum Withdrawal

Minimum withdrawals must be made from an individual’s Registered Retirement Income Fund (RRIF) beginning in the year after the RRIF is established. These minimum withdrawals are based on the individual’s age and are calculated as a percentage of the fair market value of the RRIF assets at the beginning of the year. For 2020 the government is allowing a reduction of the required minimum withdrawals from RRIFs by 25%. Individuals who have already taken out funds will not be able to recontribute.

What this means for you:

• More tax-deferred growth: If you do not need the full distribution from your retirement account(s), you now have some more time to earn tax-deferred growth before full distributions are required again in 2021.
• You still may want to take the full distribution:
  • You may still want to review your withdrawal strategies with your financial advisor and tax professional to see if it makes sense to withdraw 100% of the funds this year, depending on your income needs and tax bracket.
  • If you have access to a combination of taxable accounts, traditional retirement accounts, and Tax-Free Savings Accounts, accounts, you may want to review which is the best to take withdrawals from, considering both your current tax situation and your desire to leave assets to your heirs.

If you would like to update your existing payment schedule now or delay a payment later in the year, review and complete the payment request change form with your financial advisor.

Delay in Tax Filing Requirements

The federal income tax filing date has been extended to June 1, 2020 for individuals (other than trusts), while the June 15, 2020 deadline continues to apply for self-employed individuals and their spouses/partners. The deadline to pay any balance due for your individual income tax and benefit return for 2019 has been extended from April 30, 2020 to September 1, 2020, and from April 30, 2020 to September 1, 2020 for self-employed individuals or those who have spouses or common-law partners that are self-employed.

What this means for you:

We recommend the following when considering when to file your taxes.

• Are you expecting a refund or to owe taxes?
  • If you are owed a refund, it may be best not to wait to file to ensure you receive your refund as soon as possible.
  • If you owe taxes and have more immediate expenses, this gives you additional time to pay. That said, you want to make sure you’ll still be able to pay what you owe come September 1, 2020.
• If you expect government benefits (such as the Canada Child Benefit or the Goods and Services Tax Credit) you may want to file sooner in order to ensure your benefits are not interrupted.

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Angela Calla is a 16-year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Provincial Government Update: BC Emergency Benefit for Workers

As the battle against COVID-19 rages on, one of the sadder casualties of our shuttered and anxious economy has been the savings of older Canadians, most of whom do not have a defined benefit, defined contribution or any type of non-government pension to rely on in the best of times.

Now, faced with the same liquidity crunch that is flattening every layer of the economy, from out of work waitresses to the country’s largest banks, Canada’s 55-plus community requires – and deserves – a solution that protects the fruits of their labour.

This demographic needs cash flow to live on CPP and OAS was never enough, and with a reduction of their nest eggs it makes the problem worse. They are scared and have few choices or options. Then they watch their family members lose jobs or try to get by on reduced incomes and they, quite naturally, want to help. They need cash flow more than ever.

Their options, however, are limited. Most Canadians 55-plus don’t have the opportunity to drive income by working more. Credit cards or lines of credit are of little help for those on fixed incomes. Many have homes or equities they could, under normal circumstances, sell as a means of freeing up funds, However selling means they would have to leave there home, and rent with no appreciating asset to pull on at a later date, and make payments.

Collapsing an appreciating asset is never recommended when you want your money to last.

Homeowners are increasingly turning to reverse mortgages as a source of both interim and long-term retirement funding assistance, allowing them to pass on wealth to kids looking to buy a home for their growing families without making a mortgage payment or pulling out investment funds at a time when they are down.

Necessity has motivated many people to consider reverse mortgages and we have noticed a drastic increase in business inquiries around them.

A reverse mortgage can unlock the equity in a client’s home without increasing their tax burden or impacting their government benefits. At a time when most Canadians are seeking some form of payment relief, reverse mortgages provide them with a personalized deferral plan.

It can be in a lump sum, a monthly payment to the homeowner, or a combination of the two.

This can also be a helpful tool to use in divorce as spousal support is often a challenge to receive in changing markets and can cost thousands of dollars in legal fees generally not available when needed.

The biggest benefit and appeal of the product, besides being tax-free, is the fact that there are no payments required. The payments are deferred until the owner doesn’t live in the house full-time, it offers spousal protection in not having to re-qualify.

Some reverse mortgage lenders provide a written guarantee that ensures the customer will never owe more than the property is worth.

No Canadian homeowner should be forced to sit back and watch helplessly as circumstances beyond their control devour their savings and cast a long, dark shadow across their financial futures; they have worked too long and too hard. Reverse mortgages can help your clients come through the COVID-19 crisis stronger and more liquid, allowing them, in turn, to help those closest to them.

Angela Calla is a 16-year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Following the March 19th, 2020 announcement that British Columbia was entering a State of Emergency due to the ongoing COVID-19 Crisis, legislative changes, as well as federal and provincial government support programs were rolled out to assist people facing a loss of employment, loss of income, and other hardships brought on by this pandemic. The information came fast and furious and it can be challenging to keep track of what programs are applicable to whom and how applications should be submitted.

Early on, LandlordBC launched its COVID-19 webpage providing landlords, property managers, and resident caretakers with a one-stop resource to support you and your tenants during this time. Communication is key. Talking with your tenants about the need for social distancing and the need to limit access to common facilities is vital in the efforts to slow the spread of the virus. Beyond this, it is also important that you maintain a respectful open dialog with your tenant(s) regarding payment of rent as this directly impacts your business needs.

Simply put some tenants will not be able to afford to pay all or some of their rent; this is the sad reality of the current situation. LandlordBC has been clear with our members – we are here to support you as you work to support your tenants. There are steps you can take to mitigate potential loss and the accumulation of tenant’s rent debt. Encouraging your tenants to apply for the BC Temporary Rent Subsidy (BC-TRS) and working with them to implement a Rent Deferral Agreement will ensure that British Columbia’s rental housing ecosystem can weather this crisis.

For the BC-TRS to be administered, the tenant must apply and the supplement ($300 for individuals and $500 for those with dependents) is then paid directly to the landlord. There is no deadline to apply, through the supplement is only available for rent due in April, May, and June. Tenants who were able to make a full payment for April but now feel that they need access to these funds can still apply for this benefit.

LandlordBC has drafted a letter to assist landlords in communicating with their tenant(s) and we have updated this to include the BC-TRS program details. We encourage all landlords to send this letter via email to all tenants to ensure they are aware of the support available to them.

We are here to help you navigate this situation. If you have any questions regarding communication with your tenants or the resources that LandlordBC has provided, please do not hesitate to reach out to us.

Angela Calla is a 16-year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

We are so honored to have the privilege to help so many families strategize and plan for their financial health through these difficult times. Being awarded the top 2% of mortgage brokers wouldn’t be possible without all the members of our amazing mortgage family! The opportunity to help so many of you every day reminds us why we love what we do. THANK YOU! ❤️❤️

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Looking for some mortgage clarity during these difficult times? Watch a webinar we did with the Langley Chamber of Commerce so we can help you explore your options. For options specific to your situation feel free to reach out to us at callateam@dominionlending.ca

WATCH HERE

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

If you own a small business and are struggling right now, here are some helpful resources that will provide support.

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

In his morning address to the nation, Prime Minister Justin Trudeau on Wednesday announced expanded eligibility rules for the Canada Emergency Response Benefit and a plan to top up pay for some essential workers amid the novel coronavirus pandemic.

The CERB will become available to Canadians who have exhausted their employment insurance (EI) benefits since Jan. 1, seasonal workers who can’t find work because of COVID-19 and those who earn up to $1,000 a month, the prime minister said.

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Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

A bit about rates and government programs for those who are interested in some of the plumbing behind the scenes. With the Bank of Canada (BoC) dropping the overnight rate multiple times, we have seen lenders’ prime rates drop. But not all at the same time. The reason is, for many lenders like MCAP, something called CDOR is much more important than the BoC overnight rate. These two measures should correlate. Not this time. CDOR actually went up at first! Our cost of funds went up. I attach a little graph below. The BoC BA purchase program and CP purchase program is starting to fix many things, including CDOR. Thank you to the BoC! (can’t wait for CORRA). MCAP Prime is now able to be 2.45%. For fixed rate mortgages, government of Canada bond yields have declined, but MBS (mortgage backed securities) and CMB (Canada Mortgage Bond) spreads have widened, a lot. CMHC’s $150 billion IMPP should help bring these spreads in over time. Thank you CMHC! This would allow lenders to charge lower fixed rates soon. The spread on CMHC’s next purchase will guide the whole market.

Sourced from the President & CEO of MCAP, Mark Aldridge.

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Mortgage payments:

What are some common ways you can make mortgage payments? What do amortization periods mean for homeowners?

You can make payments monthly, accelerated biweekly, semi-monthly or weekly. It’s important to protect yourself for things out of your control. When we set up a mortgage for any client, we always set them up with the minimum monthly payment and the longest amortization for their situation. Then they can use their pre-payment privileges to increase the payments and pay off their mortgage in as little as 5 years! This is far better then handcuffing them to something which will cost them more down the road.

Then if something happens and they don’t have cash aside for an emergency they don’t have to get in debt with credit cards or lines of credit that will cost them more in the long run. If they started with a higher payment and short amortization if anything happens, they’re in a difficult spot.

A mortgage is a one-way street and it costs money to break it if needed.

What should first-time homeowners know about mortgage payments that could protect them as borrowers?

If you shop for a mortgage on your own, your credit can be negatively impacted. Lenders may flag your file if they think you are modifying your application and you won’t qualify for their new client specials that may be available at a later date. It’s best to always consult with a mortgage professional first to thoroughly understand your options.

Is there a “best choice” for the length of time you hold a mortgage?

If you are thinking of buying a home, you should see what you qualify for right away. If you are self employed, you should look into qualifying up to 2 years in advance so you can see what income you should have and evaluate any money you’ll need to take out of your company for a down payment. The sooner you know your options the sooner you’ll know if there’s something reporting incorrectly on your credit report or that you need to focus on paying off outside debt. This will ensure you are positioned in the best way possible when you do find a home. When you buy is up to you but positioning yourself best starts as soon as you have the thoughts of becoming a homeowner.

If you are getting a “real” pre-approval in place you should expect to submit an application, sign a credit consent agreement, letter of engagement, and supply income and down payment supporting documentation. Some people will have this on hand while some people may need to ask their Human Resources department or accountant and download the appropriate statements etc. Once it’s been submitted to your mortgage professional in its entirety it will generally take a full business day to review a straight-forward file.

Should homeowners try to pay off their mortgage early?

It’s all about balance and looking at everything going on. If they can afford it, we have a strategy that we implement called the inflation hedge – they make small increases throughout having the mortgage that will protect them from future payment shock but not leave them cash poor. It’s a well balanced approach. Each strategy is customized based on the profile of the borrower and personal capacity to protect equity, build wealth and avoid accumulating outside debt.

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.