TD HELOC Rates Fall – TD Prime at 2.5%

Effective March 4, 2009, TD Prime rate has changed as follows:

Term	Rate		Change
6 month convertible	5.20		N/A
1-year open	7.45		N/A
1-year closed	5.00		N/A
2-year closed	5.75		N/A
3-year closed	5.75		N/A
4-year closed	5.69		N/A
5-year closed	5.79		N/A
6-year closed	6.40		N/A
7-year closed	7.00		N/A
10-year closed	7.35		N/A
1-year closed Special	4.00		N/A
4-year closed Special	4.39		N/A
5- year closed Special	4.49		N/A
Variable Interest Rate Mortgages	TD Mortgage Prime	Variance	Rate
Closed VIRM: Rate is TD Mortgage Prime + 0.80%	3.00	+0.80	3.80
Open VIRM: Rate is TD Mortgage Prime + 1.00%	3.00	+1.00	4.00
Home Equity Line of Credit	TD Prime	Variance	Rate
Float: Rate is TD Prime + 1.50%	2.50	+1.50	4.00

 

All-in-one Strategy TD HELOC

All-in-one Strategy

all-in-one-strategy This quite a conservative strategy which can dramatically reduce overall interest paid on a mortgage (and reduce amortization).  What is further, this strategy is particularly beneficial if you have other outstanding higher interest debt (then it can actually improve your cashflow on top of that).

all-in-one-strategy $4000 in penalties & will still be far better off in the long run.  As opposed to waiting until his mortgage matured 4 years later.

 

The Smith Maneuver

The best example of how this strategy works can be found on Fraser Smith (the strategies inventor) website.  http://www.smithman.net/home.html.

This is a strategy we covered in our Advanced Financial Planning session.  As you paydown your mortgage you borrow back some of the  principal and place this in an investment.  You then get a tax refund for the investment loan, pay that against your mortgage.  You are essentially converting non tax-deductible bad mortgage debt, into good tax deductible  debt.  & in the long run the can be substantially better off.

Increased Amortization with Leverage

Hidden Money!

Increased Amortization with Leverage

 

Another strategy I employ with clients, involves increasing their mortgage amortization (which decreases payments) then taking out an investment loan and investing, with the plan of using it to pay down the mortgage in future.   It effectively lowers your monthly payment, creates a tax deduction annually, and pays off a mortgage quicker.

This looks really good, & has great potential, however it is important that you are aware of any risks associated with this particular strategy. This is the more risky of the 3 strategies (and although I have attached a sample of what this might look like – using a real client) this is really something we would want to go over before you make any decisions.

SAMPLE – for illustration purposes only

Original Principal: $248,000.00
Mortgage Loan Date: January 1, 2008
Original Proposed
Payment Frequency: Monthly Monthly
Mortgage Type: Fixed Rate Fixed Rate
Interest Rate: 5.000% 5.000%
Term (years): 10.00 10.00
Amortization (yrs/periods): 15.00 / 180 35.00 / 420
Payment Amount: $1,955 $1,244
Total Payments in First Year: $23,455 $14,922
Total Interest Cost For Term: $90,248 $115,032
Total Interest Cost For Amortization Period: $103,818 $274,280
Mortgage Balance at 10 years: $103,702 $213,809
Take out 100,000 Investment loan over 10 years with an 8% rate of growth (see
projections) = $110,226 net.
If used to pay down mortgage, outstanding balance after 10 years = 103,583 left owing on
the mortgage.
Your monthly payments are reduced by $344 per month & because your borrowing to
invest on the $100,000 investment loan. You will get a tax refund of $1764 annually.
Net result
$1764 in new tax savings
$119 less left owing on your mortgage
$344 less in monthly payments
• original cost – proposed + cost of Investment loan (367/month)
These projections are based on certain assumptions that are believed to be reasonable, but there is no assurance that the actual results
will be consistent with this projection. The actual results may vary, perhaps to a material degree, from these projections.

TD Rate changes in effect Febuary 2009

Term	Rate	Change
6-month convertible	5.20	N/A
1-year open	7.45	N/A
1-year closed	5.00	N/A
2-year closed	5.75	N/A
3-year closed	5.75	N/A
4-year closed	5.69	N/A
5-year closed	5.79	N/A
6-year closed	6.40	N/A
7-year closed	7.00	N/A
10-year closed	7.35	N/A
1-year closed Special	4.00	N/A
4-year closed Special	4.39	N/A
5- year closed Special	4.49	N/A

 

Variable Interest Rate Mortgages	TD Mortgage Prime	Variance	Rate
Closed VIRM: Rate is TD Mortgage Prime + 0.80%	3.00	+0.80	3.80
Open VIRM: Rate is TD Mortgage Prime + 1.00%	3.00	+1.00	4.00
Home Equity Line of Credit	TD Prime	Variance	Rate
Float: Rate is TD Prime + 1.50%	3.00	+1.50	4.50

Municipal Tax Rates-The Gammer Report 01-09

Had a great lunch today with Fraser Valley Commercial Real Estate expert Stephen Gammer, along with the very best of the TD Commercial Banking Team Steve Ponte and Craig Hinton.

Stephen had some really intersing things to say about the new Federal budget anouncements and the state of the market in the Fraser Valley. Clearly this is a matter close to his heart and is extremly well versed on the subject, having attended numorious conferinces and taking a major role in the UBCM

Stephen also writes for the Businnes Journal, take a look at the Gammer Report on his website at www.gammer.ca Here is the January issue regarding Municipal Tax Rates.

 

 

 

The Unchecked Municipal Tax Explosion

Municipal Tax Rates across the province are rising far faster than the rate of population growth and inflation combined. With a shaky economy being the number one issue on everyone’s mind as we face another election (Municipal Elections are November 15), we need to be looking in our individual back yards and asking our local politicians about the sustainability of rocketing tax rates and how much more property owners can bear.

The Canadian Federation of Independent Business released a report this summer stating that between 2000 – 2006, our combined rate of population growth and inflation has risen by 20%. During that same time municipal spending has grown by 35.7% and property taxes grew by 33.3%. Having come back from the Union of British Columbia Municipalities annual meeting in Penticton in late September I was able to get a first hand look into how our local politicians and bureaucrats go about solving local government issues. Controlling their level of taxation wasn’t even on the radar screen; in fact it was the opposite.

 

The #1 policy paper presented at the convention was entitled “Financing Local Government: Achieving Fiscal Balance.” The ways to achieving this fiscal balance include some of the following recommendations, “Removing Restrictions on Existing Revenue Instruments: broaden the allowable uses of Development Cost Charges revenue, use of parcel taxes and flat taxes, taxation of telecommunications companies, and use of hotel tax revenue.” Future sources of revenue the municipalities are looking for are: fuel tax, liquor tax and real property transfer tax.

 

The prospect of the introduction of a local government property transfer tax should be frightening to most home and business owners. The provincial Property Transfer Tax is one of the most hated taxes in BC and pulls in close to a billion dollars government’s coffers (depending on how much the economy grows). Putting an additional local based tax burden on property sales will only hurt home buyers and erode our standard of living and business viability. While at the UBCM I sat in on problem solving sessions where counselors and city staffers talked about the issues confronting their communities. All of their solutions were about obtaining grants from the provincial government or non-profit foundations, performing endless studies, holding community in-put sessions, and lamenting their under funding from the senior levels of government.

As printed in The Business Journal

By Stephen Gammer

www.gammer.ca