This past weekend I sat down with some clients who have a mortgage with a local credit union. Of course, as do all credit unions and a lot of the bigger banks do, their mortgage was registered as a collateral charge.
The lender will say it's a bonus. I say it's a huge negative especially when there's no real difference in product with any other lender not doing this.
When I received these clients 'land titles Form B' I had noticed that the 'registered mortgage amount' was $700,000. Let's keep in mind the clients purchase price was a mere $315,000 (original mortgage balance of about $240k or so). I almost fell off my chair as this amount is massive. They're essentially tying you up for life unless you pay legal fees to get out.
For full explanations on these style of mortgages read a couple past blogs here and here
Monday, March 12, 2012
Thursday, March 8, 2012
Bank of Canada holds rate but says outlook improved
OTTAWA (Reuters) - The Bank of Canada held its key interest rate unchanged on Thursday, as anticipated, but issued a more upbeat outlook for the Canadian and global economies that suggests it is starting to think about an eventual rate hike.
The central bank maintained its overnight lending rate target at 1 percent for the 12th straight time. It said the Canadian economic outlook was "marginally improved", uncertainty around the global economy had decreased and the profile for inflation was somewhat firmer than it had foreseen.
It also added a line about the dangers of high household debt levels in a sign of increasing worry about the consequences of ultra-low borrowing costs.
"Canadian household spending is expected to remain high relative to GDP (gross domestic product) as households add to their debt burden, which remains the biggest domestic risk," the bank said in a statement.
The bank repeated that there was "considerable monetary policy stimulus" in Canada but made no mention of the need to eventually withdraw that stimulus, language that it used in May and July of last year.
It tempered its more optimistic tone by noting that while it expected the economy to perform better in the first quarter than forecast, it would be due to temporary factors. Exports will contribute little to growth despite stronger U.S. demand because of persistent Canadian dollar strength and competitive challenges, it predicted. (Reporting by Louise Egan; Editing by Randall Palmer)
Tuesday, February 21, 2012
BC First Time New Home Buyers Bonus of up to $10k.
Requirements to Qualify for the Bonus ELIGIBLE FIRST-TIME NEW HOME BUYER
You will qualify as a first-time new home buyer if:
»» You purchase or build an eligible new home located in B.C.;
»» You, or for couples, you and your spouse or common law partner, have never
previously owned a primary residence;
»» You file a 2011 B.C. resident personal income tax return, or if you move to B.C.
after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
»» You are eligible for the B.C. HST New Housing Rebate; and
»» You intend to live in the home as your primary residence. ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and
that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
»» A written agreement of purchase and sale is entered into on or after February 21, 2012;
»» HST is payable on the home (e.g., HST will generally be payable if
ownership or possession of the home transfers before April 1, 2013 – see
further details below); and
»» No one else has claimed a bonus in respect of the home.The bonus will be available in respect of owner-built homes where:
»» A written agreement of purchase and sale in respect of the land and building is
entered into on or after February 21, 2012;
»» Construction of the home is complete, or the home is occupied, before April 1, 2013; and
»» No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior
of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to
HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
»» For single individuals, the bonus is reduced by 20 cents for every dollar in
net income over $150,000 (bonus is reduced to zero at $200,000 net income).
»» For couples, the bonus is reduced by 10 cents for every dollar in family net
income over $150,000 (bonus is reduced to zero at $250,000 family net income).
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once
application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.
Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
»» Detached Houses, semi-detached houses, duplexes and townhouses,
»» Residential condominium units,
»» Mobile homes and floating homes, and
»» Residential units in a cooperative housing corporation.
For examples by property price click here
You will qualify as a first-time new home buyer if:
»» You purchase or build an eligible new home located in B.C.;
»» You, or for couples, you and your spouse or common law partner, have never
previously owned a primary residence;
»» You file a 2011 B.C. resident personal income tax return, or if you move to B.C.
after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
»» You are eligible for the B.C. HST New Housing Rebate; and
»» You intend to live in the home as your primary residence. ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and
that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
»» A written agreement of purchase and sale is entered into on or after February 21, 2012;
»» HST is payable on the home (e.g., HST will generally be payable if
ownership or possession of the home transfers before April 1, 2013 – see
further details below); and
»» No one else has claimed a bonus in respect of the home.The bonus will be available in respect of owner-built homes where:
»» A written agreement of purchase and sale in respect of the land and building is
entered into on or after February 21, 2012;
»» Construction of the home is complete, or the home is occupied, before April 1, 2013; and
»» No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior
of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to
HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
»» For single individuals, the bonus is reduced by 20 cents for every dollar in
net income over $150,000 (bonus is reduced to zero at $200,000 net income).
»» For couples, the bonus is reduced by 10 cents for every dollar in family net
income over $150,000 (bonus is reduced to zero at $250,000 family net income).
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once
application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.
Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
»» Detached Houses, semi-detached houses, duplexes and townhouses,
»» Residential condominium units,
»» Mobile homes and floating homes, and
»» Residential units in a cooperative housing corporation.
For examples by property price click here
Tuesday, February 7, 2012
CMHC - Stated Income Programs - BIG CHANGES
There’s a growing air of uncertainty in the mortgage industry, one we haven’t sensed since the tail end of the credit crunch.
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
Thursday, January 19, 2012
It pays to check the fine print on low-rate offerings
Here's an article I read that makes a lot of sense.
It was a top news story last week. One of the major banks offered the lowest five-year fixed interest rate in Canadian history at 2.99 per cent. As a licensed mortgage agent, I had to quickly attain as much information as I could on the actual contract before I could recommend it to my clients. You know the old saying “if it is too good to be true …”
My research revealed that many of these low-rate mortgages have such restrictive contracts that they could get you into trouble down the road. Before you sign up for that great rate, make sure you are not signing up for something that could handcuff you financially down the road. You need a mortgage that will be flexible should you experience life changes. I have seen many clients brought to the financial brink because of the penalties and restrictions written into their mortgage contract.
Work with an expert and check under the hood. Not all mortgage contracts are created equal.
One of the scariest mortgages created in the last two years by the major banks is what mortgage broker’s are nicknaming the “mousetrap mortgage.” Mousetrap mortgages are so named because once you are in, you are trapped. The cheese is the initial great rate, but the trap comes in the form of extremely restrictive charges in the contract. I call them Hotel California mortgages because “you can check out anytime you like, but you can never leave…”. The technical term for a “mousetrap mortgage” is a collateral mortgage.
Unlike the traditional mortgage, which uses the property as security and will lend out up to 95 per cent of the home’s value, the collateral mortgage is a loan that is attached to a promissory note and is backed by the collateral security of a mortgage on a property. Because the security on a collateral mortgage is a promissory note with a lien on the property, the lender is free to register as much as 125 per cent of the value of the property, even though they are only advancing maximum 80 per cent to the borrower.
It is similar to a revolving line of credit allowing borrowers to increase their loan without the inconvenience or cost of refinancing. How nice. You have an amazing rate for the next five years and you can conveniently refinance anytime.
The major caveat with collateral mortgage is that the lender is free to change the interest rate on the contract under certain circumstances. Something as small as a missed or late payment can trigger an interest-rate increase. Some contracts are so restrictive that changes to your debt held with other institutions can also trigger an increase in rates of your mortgage contract.
One of these low-rate mortgages states that you must remain with the lender for the five years of the contract. As long as you stay with them you can refinance, and they even state that if you move, you can take their mortgage with you to the new property. But what are the conditions? Will a refinance with them trigger a change of rate? Will a port of your mortgage to a new property trigger a rate increase? What happens to your mortgage if you need to get a car loan with another lender? What happens at the end of the contract? Are there penalties if you don’t renew with them? These questions need to be asked.
It is imperative that you ask the right questions, get independent legal advice and have a licensed mortgage agent thoroughly go through the contract with you in detail. Your mortgage agent should be able to answer your questions by referring directly to the contract. While the big banks will offer to cover legal fees if you use their clearing house, I would suggest contacting your lawyer and paying to have them take a second look.
For most people, sticking it out for five years is not a big deal; especially at 2.99 per cent. But you never know what life might throw at you. You may experience a divorce, or get a job transfer or need to refinance so you need to be very clear about what will happen to your mortgage should you need to make changes. Remember costly surprises will wipe out a lot more than a few points of interest savings.
------
We never want to imagine a change in our lives negatively that would make us need to redo the mortgage in the less than five years, however, in my 7 years in doing mortgages, it's very rare that a mortgage goes to term due to something in life coming up. Just today I had to turn away 2 people asking for a second mortgage (to buy a thriving business and to pay a lawyer for a divorce) and both were denied due to a collateral charge registered on their mortgage eating up any available equity. Life changes!
Tuesday, January 17, 2012
Locking in your legacy
Small read, yet good....
If you are going to leave a legacy that impacts people, there is something that you are going to have to come to grips with:
You are going to die.
What? What kind of motivational tool is that? Real inspiring!
Actually, it is. Our mortality may perhaps be the ultimate inspiration and motivation! If we lived on this earth eternally, we could be procrastinators extraordinaire! We would never have to get anything done because there would always be tomorrow. But alas, we pass on and all we leave are the memories and the lives of others we affected while we were here. Sounds gloomy? In actuality, it is exciting! You see, this gives us purpose—and a deadline (pun intended).
We can choose how we will live on in the hearts and memories of others. We do this by purposing to live NOW in a way that makes change happen not only within us but also those around us.
What kind of legacy will you leave? How will your family and friends remember you? How will you leave your descendants in the following areas? Give some thought to them and make some changes. In doing so, you will begin to lock in your legacy.
Below are some subject areas that that I hope will cause you to think—really think—about how you can leave a legacy.
Emotionally
Have you ever stepped back and asked yourself how you treat other people and how that affects them emotionally? I have four children. I am acutely aware that they are being shaped emotionally by how I treat them and teach them how to deal with the world. I am especially aware of this from my own background. I can directly trace my emotional shortcomings to the emotional coolness I felt from my own family. Are you raising emotionally healthy kids who are both independent as well as interdependent? Are you helping your spouse to grow emotionally? Give this some serious thought.
Spiritually
In my mind, the "God" question is the most important. You know, I often hear people say that they are just going to let their kids "figure it out on their own." These same people will show them how to shoot a basketball, trade stocks, and build a tree house, all simply temporal issues, but then leave the answers to the most important question up in the air! Now I am not advocating cramming anything down their throats, just taking the time to help them find their way. Are you helping and encouraging those around you to find their spiritual life? Are you living an authentic spiritual life that will be your legacy? Give some serious thought to this.
Physically
Now I know what you are thinking: I can't change my genes. We got what we got and we have to live with it. To a certain extent this is true. I am 5 foot 11 inches tall for the rest of my life. I will never be 6 foot, and neither will my kids. What I am talking about though, is to be examples of taking our physical health seriously. The statistics prove that whatever bad habits you have, your kids are likely to do them as well. Why? Because you are their example. This is why I work to stay physically fit. I work out. I lift weights. I eat right (most of the time—I am a sucker for Breyer's Vanilla Bean Ice Cream). I don't smoke. I want to leave a legacy of good health for my kids. True, they can still go astray, but I will do my best to give them a good example to follow. Give this some serious thought.
Financially
There are two primary ways you can leave a financial legacy. First, teach your loved ones about how to handle money (some of you may first need to learn yourself). There are just so many good books on the subject that there is no reason for not knowing how to handle money. "Rich Dad, Poor Dad" is a good book to start with, or perhaps "The Millionaire Next Door." These will teach you the basics. Secondly, you can leave an inheritance. Now let me be clear on this. This does not have to be after you die. In fact, the more you have, the more I believe you ought to give away while you are alive. Let's face it, the older you get, the less need you have for money once the basics are taken care of. It always cracks me up that by the time you can afford a big house, your kids are gone and you don't need one! Turn the money over early so you can watch the joy of your loved ones spending, investing and giving it! This is of course predicated upon the assumption that you have first taught them how to handle it. If you have, then you should give it away while you're alive so you can enjoy seeing your legacy in action! Give your financial inheritance some serious thought.
Relationally
What kind of legacy will you leave in regard to how you interact relationally with people you know? When people look at how you interact with others, will they be better off if they develop the same relational habits? Will your legacy be one of love, patience, kindness, faithfulness, gentleness and forgiveness? Give the idea of influencing others relationally some serious thought.
Intellectually
I don't know about you, but I want to challenge people to deeper intellectual thought. In a day and age of "People Magazine" mentalities, we need people who will challenge us to think deeper. Are you doing anything that will challenge your sphere of influence to intellectual gains? Will those left after you are gone say that you made them think in ways they hadn't before? That you challenged them to be smarter? Give this issue some serious thought.
Functionally
Functionally? Yep. It's a catchall word. It is how you function. How will those you influence actually function? This is to a great degree how you function. Are you well-rounded? Are you balanced? Do you keep the main things the main things? Is your life functioning well? Make it your goal to live a balanced, functional life so you can leave a legacy of such. Give your life function some serious thought.
If you are going to leave a legacy that impacts people, there is something that you are going to have to come to grips with:
You are going to die.
What? What kind of motivational tool is that? Real inspiring!
Actually, it is. Our mortality may perhaps be the ultimate inspiration and motivation! If we lived on this earth eternally, we could be procrastinators extraordinaire! We would never have to get anything done because there would always be tomorrow. But alas, we pass on and all we leave are the memories and the lives of others we affected while we were here. Sounds gloomy? In actuality, it is exciting! You see, this gives us purpose—and a deadline (pun intended).
We can choose how we will live on in the hearts and memories of others. We do this by purposing to live NOW in a way that makes change happen not only within us but also those around us.
What kind of legacy will you leave? How will your family and friends remember you? How will you leave your descendants in the following areas? Give some thought to them and make some changes. In doing so, you will begin to lock in your legacy.
Below are some subject areas that that I hope will cause you to think—really think—about how you can leave a legacy.
Emotionally
Have you ever stepped back and asked yourself how you treat other people and how that affects them emotionally? I have four children. I am acutely aware that they are being shaped emotionally by how I treat them and teach them how to deal with the world. I am especially aware of this from my own background. I can directly trace my emotional shortcomings to the emotional coolness I felt from my own family. Are you raising emotionally healthy kids who are both independent as well as interdependent? Are you helping your spouse to grow emotionally? Give this some serious thought.
Spiritually
In my mind, the "God" question is the most important. You know, I often hear people say that they are just going to let their kids "figure it out on their own." These same people will show them how to shoot a basketball, trade stocks, and build a tree house, all simply temporal issues, but then leave the answers to the most important question up in the air! Now I am not advocating cramming anything down their throats, just taking the time to help them find their way. Are you helping and encouraging those around you to find their spiritual life? Are you living an authentic spiritual life that will be your legacy? Give some serious thought to this.
Physically
Now I know what you are thinking: I can't change my genes. We got what we got and we have to live with it. To a certain extent this is true. I am 5 foot 11 inches tall for the rest of my life. I will never be 6 foot, and neither will my kids. What I am talking about though, is to be examples of taking our physical health seriously. The statistics prove that whatever bad habits you have, your kids are likely to do them as well. Why? Because you are their example. This is why I work to stay physically fit. I work out. I lift weights. I eat right (most of the time—I am a sucker for Breyer's Vanilla Bean Ice Cream). I don't smoke. I want to leave a legacy of good health for my kids. True, they can still go astray, but I will do my best to give them a good example to follow. Give this some serious thought.
Financially
There are two primary ways you can leave a financial legacy. First, teach your loved ones about how to handle money (some of you may first need to learn yourself). There are just so many good books on the subject that there is no reason for not knowing how to handle money. "Rich Dad, Poor Dad" is a good book to start with, or perhaps "The Millionaire Next Door." These will teach you the basics. Secondly, you can leave an inheritance. Now let me be clear on this. This does not have to be after you die. In fact, the more you have, the more I believe you ought to give away while you are alive. Let's face it, the older you get, the less need you have for money once the basics are taken care of. It always cracks me up that by the time you can afford a big house, your kids are gone and you don't need one! Turn the money over early so you can watch the joy of your loved ones spending, investing and giving it! This is of course predicated upon the assumption that you have first taught them how to handle it. If you have, then you should give it away while you're alive so you can enjoy seeing your legacy in action! Give your financial inheritance some serious thought.
Relationally
What kind of legacy will you leave in regard to how you interact relationally with people you know? When people look at how you interact with others, will they be better off if they develop the same relational habits? Will your legacy be one of love, patience, kindness, faithfulness, gentleness and forgiveness? Give the idea of influencing others relationally some serious thought.
Intellectually
I don't know about you, but I want to challenge people to deeper intellectual thought. In a day and age of "People Magazine" mentalities, we need people who will challenge us to think deeper. Are you doing anything that will challenge your sphere of influence to intellectual gains? Will those left after you are gone say that you made them think in ways they hadn't before? That you challenged them to be smarter? Give this issue some serious thought.
Functionally
Functionally? Yep. It's a catchall word. It is how you function. How will those you influence actually function? This is to a great degree how you function. Are you well-rounded? Are you balanced? Do you keep the main things the main things? Is your life functioning well? Make it your goal to live a balanced, functional life so you can leave a legacy of such. Give your life function some serious thought.
Follow up on the BMO as I missed two important factors!
There's two other reasons that this mortgage at BMO may not be a part of your strategy.
One being, that you can not register their line of credit product in behind it. Making you search else where for it or making you take an unsecured line of credit at much higher rates.
The other is that the register their mortgages as collaterall mortgages. Read here and here on why these mortgages may not be for you.
Don't get me wrong. This product may be for some. You must allow us a chance to sit down and see if it is or not!
Another small story on the collaterall charge mortgages. I just recently finished one up with a client who needed a private mortgage to finish some renovations on his house. Since his big bank mortgage was registered as a collaterall charge with a very high global limit, we were unable to do anything until the client refinanced his existing mortgage going from a deep discount off of prime to just prime on the variable. He paid a full penalty too!
As a mortgage planner and educator, I have to make sure I know and understand every product out there. You have to trust that I am on your side and do what it takes to make sure you have the lowest cost of home ownership....not just the lowest rate.
One being, that you can not register their line of credit product in behind it. Making you search else where for it or making you take an unsecured line of credit at much higher rates.
The other is that the register their mortgages as collaterall mortgages. Read here and here on why these mortgages may not be for you.
Don't get me wrong. This product may be for some. You must allow us a chance to sit down and see if it is or not!
Another small story on the collaterall charge mortgages. I just recently finished one up with a client who needed a private mortgage to finish some renovations on his house. Since his big bank mortgage was registered as a collaterall charge with a very high global limit, we were unable to do anything until the client refinanced his existing mortgage going from a deep discount off of prime to just prime on the variable. He paid a full penalty too!
As a mortgage planner and educator, I have to make sure I know and understand every product out there. You have to trust that I am on your side and do what it takes to make sure you have the lowest cost of home ownership....not just the lowest rate.
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