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moneysense.ca, 23/10/06
This and That
- I have to confess that I did not fare too well in Suze Orman’s test of Homeowners insurance smarts. I did know that our policy is adjusted for inflation, offers replacement cost for property and personal liability coverage. I was still not sure if we have guaranteed replacement coverage for the dwelling, so I will have to call the agent to find out.
- The latest rash of conversions of BCE and Telus into income trusts is once again bringing the tax leakage issue to the forefront. The latest quarterly outlook from Leith Wheeler tackles the issue and comes up with some possible solutions to address the problem.
- Automatic enrolment in a RRSP with a default contribution rate of 3% would be a splendid idea. They are implementing the idea for retirement plans in the United States. Why can’t we?
- Sun columnist Linda Leatherdale thinks the 40-year mortgage is a mortgage life sentence.
moneysense.ca, 23/10/06
If we combine mortgage from self-directed RRSP, high rate for 1 year open mortgage (8.55% from CIBC, http://www.cibc.com/ca/rates/) and 40 years amortization we can get very good impact on money cashflow. Specifically if we look for some economists’ prediction for US and Canada slowing down in 2007.
Any thoughts?
Alex: I am not sure I understand. Would this be investing funds from the RRSP in your own mortgage?
Yes, to improve cash flow and release some additional money for other goal, such as paying down line of credit.
If you pay your RRSP a high mortgage interest, how will it help your cash flow? Also the extra interest you are paying your RRSP (8.55% – best interest you can get elsewhere), comes off your after-tax income and as a reader pointed out in the mortgage in RRSP post, you will be taxed twice on the difference. Isn’t it better to get a variable rate, below prime mortgage with the standard 25-year amortization and pay off LOC as funds permit?