Podcast
Questions and Answers
What is one reason why someone might need to choose a longer amortization period?
What is one reason why someone might need to choose a longer amortization period?
- To reduce the number of ratio tests required
- To have lower monthly payments (correct)
- To increase the total interest paid
- To speed up mortgage repayment
What is the longest amortization period allowed on Canadian mortgages?
What is the longest amortization period allowed on Canadian mortgages?
- 15 years
- 30 years
- 25 years (correct)
- 20 years
What advantage does a mortgage broker have over a bank in arranging mortgages for home buyers?
What advantage does a mortgage broker have over a bank in arranging mortgages for home buyers?
- Exclusive access to limited mortgage products
- Limited options for mortgage shopping
- Ability to offer higher interest rates
- Negotiating lower mortgage rates than banks (correct)
What does an open mortgage allow the borrower to do?
What does an open mortgage allow the borrower to do?
When might an open mortgage be useful to a home buyer?
When might an open mortgage be useful to a home buyer?
Why might a bank be unable to fully match the rate that a mortgage broker can obtain for a home buyer?
Why might a bank be unable to fully match the rate that a mortgage broker can obtain for a home buyer?
What is one way an investor can mitigate risk while still benefiting from the higher yields of junk bonds?
What is one way an investor can mitigate risk while still benefiting from the higher yields of junk bonds?
What distinguishes Real Return Bonds (RRBs) from regular bonds?
What distinguishes Real Return Bonds (RRBs) from regular bonds?
When are Real Return Bonds (RRBs) considered advantageous investments?
When are Real Return Bonds (RRBs) considered advantageous investments?
What is the primary reason investors consider Real Return Bonds (RRBs) as useful investments?
What is the primary reason investors consider Real Return Bonds (RRBs) as useful investments?
How do Real Return Bonds (RRBs) perform compared to regular bonds in high inflation scenarios?
How do Real Return Bonds (RRBs) perform compared to regular bonds in high inflation scenarios?
What is the maturity period typically associated with Real Return Bonds (RRBs)?
What is the maturity period typically associated with Real Return Bonds (RRBs)?
What is one of the benefits of using a TFSA as an emergency fund?
What is one of the benefits of using a TFSA as an emergency fund?
What is one advantage of an RRSP contribution regarding maintaining financial flexibility?
What is one advantage of an RRSP contribution regarding maintaining financial flexibility?
How does the text differentiate between saving money and investing?
How does the text differentiate between saving money and investing?
What is compounding in the context of investing?
What is compounding in the context of investing?
What is one way to utilize a tax refund from making RRSP contributions?
What is one way to utilize a tax refund from making RRSP contributions?
In what way can a TFSA be utilized for financial goals other than retirement?
In what way can a TFSA be utilized for financial goals other than retirement?
What is the maximum combined OAS and GIS payment that an individual can receive per month?
What is the maximum combined OAS and GIS payment that an individual can receive per month?
Which type of pension plan provides a retired employee with a predetermined monthly benefit based on earnings history, years of service, and age?
Which type of pension plan provides a retired employee with a predetermined monthly benefit based on earnings history, years of service, and age?
What percentage of public-sector employees belong to a Defined Benefit Pension Plan according to the text?
What percentage of public-sector employees belong to a Defined Benefit Pension Plan according to the text?
What is the main factor that determines the eventual pension benefit in a Defined Contribution Pension Plan?
What is the main factor that determines the eventual pension benefit in a Defined Contribution Pension Plan?
What does it mean for an employee's pension plan to be vested?
What does it mean for an employee's pension plan to be vested?
What happens if an employee's employment is terminated before achieving vested status in the pension plan?
What happens if an employee's employment is terminated before achieving vested status in the pension plan?
Why is travel medical insurance necessary when leaving Canada?
Why is travel medical insurance necessary when leaving Canada?
Why is home insurance considered a mandatory expense for prudent homeowners?
Why is home insurance considered a mandatory expense for prudent homeowners?
What makes travel insurance a valuable protection for travelers?
What makes travel insurance a valuable protection for travelers?
In what scenario would not having travel medical insurance be most detrimental?
In what scenario would not having travel medical insurance be most detrimental?
Why should travelers consider insuring themselves and their families before leaving Canada?
Why should travelers consider insuring themselves and their families before leaving Canada?
What motivates homeowners to accept home insurance as a mandatory expense?
What motivates homeowners to accept home insurance as a mandatory expense?
What must happen to an RRSP by the end of the year the holder turns 71?
What must happen to an RRSP by the end of the year the holder turns 71?
What percentage of the RRIF balance must be withdrawn in the first year upon starting withdrawals?
What percentage of the RRIF balance must be withdrawn in the first year upon starting withdrawals?
What happens to the remaining balance in an RRSP or RRIF when the owner passes away?
What happens to the remaining balance in an RRSP or RRIF when the owner passes away?
What does the term 'marginal tax bracket' refer to?
What does the term 'marginal tax bracket' refer to?
At what age does the percentage of RRIF withdrawals peak at 20%, as per the text?
At what age does the percentage of RRIF withdrawals peak at 20%, as per the text?
What type of investments should a prudent investor consider including in their portfolio, especially as they approach retirement?
What type of investments should a prudent investor consider including in their portfolio, especially as they approach retirement?
What defines financial independence?
What defines financial independence?
In the context of investments, what is the primary purpose of a bond?
In the context of investments, what is the primary purpose of a bond?
When an individual buys a bond, what role do they take on in relation to the issuer?
When an individual buys a bond, what role do they take on in relation to the issuer?
What distinguishes Real Return Bonds (RRBs) from regular bonds?
What distinguishes Real Return Bonds (RRBs) from regular bonds?
How does the text describe the relationship between interest rates and returns on fixed-income securities?
How does the text describe the relationship between interest rates and returns on fixed-income securities?
What is the main benefit of contributing to an RRSP in terms of tax treatment?
What is the main benefit of contributing to an RRSP in terms of tax treatment?
How are withdrawals from an RRSP typically treated for tax purposes?
How are withdrawals from an RRSP typically treated for tax purposes?
What happens to the earnings on funds held within an RRSP in terms of tax treatment?
What happens to the earnings on funds held within an RRSP in terms of tax treatment?
For how long can earnings on funds held within an RRSP remain tax-exempt?
For how long can earnings on funds held within an RRSP remain tax-exempt?
What percentage of earned income can be contributed to an RRSP in any calendar year?
What percentage of earned income can be contributed to an RRSP in any calendar year?
How does having an RRSP help individuals maintain financial flexibility?
How does having an RRSP help individuals maintain financial flexibility?
What is the minimum percentage of a RRIF's total value that must be withdrawn beginning the year after an RRSP holder turns 71?
What is the minimum percentage of a RRIF's total value that must be withdrawn beginning the year after an RRSP holder turns 71?
Which of the following is NOT an item to consider when making individual retirement plans based on the text?
Which of the following is NOT an item to consider when making individual retirement plans based on the text?
At what age does the minimum withdrawal from an RRIF reach 20% according to the text?
At what age does the minimum withdrawal from an RRIF reach 20% according to the text?
Which contribution ceases upon retirement based on the text?
Which contribution ceases upon retirement based on the text?
Seniors qualify for a tax credit of up to $2,000 annually if they:
Seniors qualify for a tax credit of up to $2,000 annually if they:
How are Index Funds typically managed and available for purchase?
How are Index Funds typically managed and available for purchase?
What distinguishes Exchange Traded Funds (ETFs) from Index Funds in terms of trading?
What distinguishes Exchange Traded Funds (ETFs) from Index Funds in terms of trading?
What is a common way to purchase Guaranteed Investment Certificates (GICs) and Treasury Bills (T-Bills)?
What is a common way to purchase Guaranteed Investment Certificates (GICs) and Treasury Bills (T-Bills)?
How long must investment values rise in order for it to be considered a Bull Market?
How long must investment values rise in order for it to be considered a Bull Market?
In a Bear Market, what typically happens to investment values?
In a Bear Market, what typically happens to investment values?
What is the defining feature of a Market Correction?
What is the defining feature of a Market Correction?
What led to major banks worldwide being threatened with collapse according to the text?
What led to major banks worldwide being threatened with collapse according to the text?
In the context of the U.S. economic crisis of 2008/2009, what happened as house prices began to soften in 2006?
In the context of the U.S. economic crisis of 2008/2009, what happened as house prices began to soften in 2006?
What event led to major write-downs of capital assets by many banks and financial institutions globally?
What event led to major write-downs of capital assets by many banks and financial institutions globally?
Why were many U.S. mortgages issued to homeowners with a restricted ability to repay their loans?
Why were many U.S. mortgages issued to homeowners with a restricted ability to repay their loans?
What was created in a semi-coordinated, world-wide effort to prevent the global recession from deteriorating into a full-blown depression?
What was created in a semi-coordinated, world-wide effort to prevent the global recession from deteriorating into a full-blown depression?
What caused delinquencies to soar and foreclosures to follow during the U.S. economic crisis of 2008/2009?
What caused delinquencies to soar and foreclosures to follow during the U.S. economic crisis of 2008/2009?
What is a potential disadvantage of choosing a longer amortization period for a mortgage?
What is a potential disadvantage of choosing a longer amortization period for a mortgage?
What is the primary advantage a mortgage broker has over a bank when arranging mortgages?
What is the primary advantage a mortgage broker has over a bank when arranging mortgages?
When might an open mortgage be useful to a home buyer?
When might an open mortgage be useful to a home buyer?
What is a potential downside of banks compared to mortgage brokers in negotiating mortgage rates?
What is a potential downside of banks compared to mortgage brokers in negotiating mortgage rates?
In what way does a longer amortization period impact the ability to qualify for a mortgage?
In what way does a longer amortization period impact the ability to qualify for a mortgage?
What is a feature of an open mortgage that benefits borrowers?
What is a feature of an open mortgage that benefits borrowers?
How are contributions to an RRSP treated for tax purposes?
How are contributions to an RRSP treated for tax purposes?
What is the main benefit of having a bank automatically transfer money to a savings account?
What is the main benefit of having a bank automatically transfer money to a savings account?
What happens to earnings made on funds held within an RRSP while they remain within the plan?
What happens to earnings made on funds held within an RRSP while they remain within the plan?
How are withdrawals from an RRSP treated for tax purposes?
How are withdrawals from an RRSP treated for tax purposes?
What is the primary purpose of setting up an RRSP according to the text?
What is the primary purpose of setting up an RRSP according to the text?
What percentage of the RRIF balance must be withdrawn in the first year, as stated in the text?
What percentage of the RRIF balance must be withdrawn in the first year, as stated in the text?
What happens to the RRSP or RRIF balance when the owner dies, as per the text?
What happens to the RRSP or RRIF balance when the owner dies, as per the text?
Define a 'Registered Retirement Income Fund' (RRIF) based on the text.
Define a 'Registered Retirement Income Fund' (RRIF) based on the text.
What is the term 'marginal tax bracket' referring to, as mentioned in the text?
What is the term 'marginal tax bracket' referring to, as mentioned in the text?
When do withdrawals from a Registered Retirement Income Fund (RRIF) have to start according to the text?
When do withdrawals from a Registered Retirement Income Fund (RRIF) have to start according to the text?
What types of investments can be made within an RRSP, according to the text?
What types of investments can be made within an RRSP, according to the text?
What distinguishes a single bond from a bond fund?
What distinguishes a single bond from a bond fund?
How are bond funds different from single bonds in terms of maturity?
How are bond funds different from single bonds in terms of maturity?
What sets bond funds apart from single bonds regarding interest rate guarantee?
What sets bond funds apart from single bonds regarding interest rate guarantee?
How do bond funds vary from single bonds in terms of investment composition?
How do bond funds vary from single bonds in terms of investment composition?
In what way does the composition of a single bond differ from that of a bond fund?
In what way does the composition of a single bond differ from that of a bond fund?
How do bond funds differ from single bonds in terms of investment risk?
How do bond funds differ from single bonds in terms of investment risk?
Why might an open mortgage be useful for someone expecting to come into a large sum of money soon?
Why might an open mortgage be useful for someone expecting to come into a large sum of money soon?
What is the significance of the prime rate in the context of lending?
What is the significance of the prime rate in the context of lending?
Why is it important for young individuals to establish good spending and debt-management habits early on?
Why is it important for young individuals to establish good spending and debt-management habits early on?
What are some reasons mentioned in the text why saving money becomes challenging once you have a full-time job and live independently?
What are some reasons mentioned in the text why saving money becomes challenging once you have a full-time job and live independently?
In what scenario would someone not benefit from an open mortgage despite expecting a large sum of money?
In what scenario would someone not benefit from an open mortgage despite expecting a large sum of money?
Why are early spending and debt-management habits particularly crucial for young people according to the text?
Why are early spending and debt-management habits particularly crucial for young people according to the text?
What does a bond's 'par value' represent?
What does a bond's 'par value' represent?
Why does the price of a bond change over time?
Why does the price of a bond change over time?
What is a 'capital gain' in the context of buying and selling bonds?
What is a 'capital gain' in the context of buying and selling bonds?
How can a bondholder prevent a 'capital loss' when buying and selling bonds?
How can a bondholder prevent a 'capital loss' when buying and selling bonds?
What is a 'junk bond'?
What is a 'junk bond'?
In what situation would a bond be priced higher than its initial offering due to changes in interest rates?
In what situation would a bond be priced higher than its initial offering due to changes in interest rates?
How are contributions to an RESP treated for tax purposes?
How are contributions to an RESP treated for tax purposes?
How are earnings made on the funds held within an RESP treated for tax purposes when they remain within the RESP?
How are earnings made on the funds held within an RESP treated for tax purposes when they remain within the RESP?
When withdrawals are made from an RESP to pay for college or university studies, how are they treated for tax purposes?
When withdrawals are made from an RESP to pay for college or university studies, how are they treated for tax purposes?
Why might using a TFSA during early savings years be preferable to making RRSP contributions?
Why might using a TFSA during early savings years be preferable to making RRSP contributions?
What distinguishes contributions to an RESP from contributions to an RRSP regarding tax treatment?
What distinguishes contributions to an RESP from contributions to an RRSP regarding tax treatment?
In what way do withdrawals from an RESP after post-secondary education differ in tax treatment from pre-education withdrawals?
In what way do withdrawals from an RESP after post-secondary education differ in tax treatment from pre-education withdrawals?
What is the minimum percentage of the RRIF’s total value that must be withdrawn annually, starting the year after the RRSP holder turns 71?
What is the minimum percentage of the RRIF’s total value that must be withdrawn annually, starting the year after the RRSP holder turns 71?
Which of the following is NOT one of the six items to consider when making individual retirement plans as listed in the text?
Which of the following is NOT one of the six items to consider when making individual retirement plans as listed in the text?
What tax credit can seniors qualify for upon retirement, if they receive pension or RRIF income?
What tax credit can seniors qualify for upon retirement, if they receive pension or RRIF income?
At what age does the minimum withdrawal from a RRIF reach 20% according to the text?
At what age does the minimum withdrawal from a RRIF reach 20% according to the text?
What happens to withdrawals from a RRIF in terms of taxes according to the text?
What happens to withdrawals from a RRIF in terms of taxes according to the text?
Which of the following is NOT a major change that occurs on retirement as mentioned in the text to help maintain a retiree's lifestyle on lower pension income?
Which of the following is NOT a major change that occurs on retirement as mentioned in the text to help maintain a retiree's lifestyle on lower pension income?
What advantage does pension income-splitting provide to retirees?
What advantage does pension income-splitting provide to retirees?
Why is it prudent to shift investment portfolio allocations before retirement age?
Why is it prudent to shift investment portfolio allocations before retirement age?
What is one disadvantage of Segregated Funds compared to other managed funds?
What is one disadvantage of Segregated Funds compared to other managed funds?
What is the primary purpose of pension income-splitting for couples?
What is the primary purpose of pension income-splitting for couples?
In what way does shifting towards fixed-income investments before retirement mitigate risk?
In what way does shifting towards fixed-income investments before retirement mitigate risk?
What is a key benefit of utilizing pension income-splitting for tax purposes?
What is a key benefit of utilizing pension income-splitting for tax purposes?
Study Notes
- The maximum combined OAS and GIS payment for an individual is $1,443 per month in 2017, but only if there is no other income.
- GIS payments are not taxable, and all payments are adjusted quarterly for inflation.
- A Defined Benefit Pension Plan provides a predetermined monthly benefit based on earnings history, years of service, and age. About 80% of public-sector employees belong to this plan.
- A Defined Contribution Pension Plan has specified contribution levels, with the eventual benefit depending on contributions and investment earnings.
- Vesting in a pension plan requires a minimum number of years of employment. If an employee is terminated before vesting, they may not receive the employer's contribution.
- An open mortgage allows for partial or total payment without penalty at the borrower's discretion.
- Travel Medical Insurance covers financial losses related to traveling and is crucial due to high medical costs abroad.
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Description
Test your knowledge on mortgage amortization periods, including reasons for choosing a longer period and longest period allowed in Canada. Explore the role of mortgage brokers in helping individuals seek mortgages.
