With the significant increase in interest rates over the past year, and with home buying and selling season right around the corner, I thought it would be great to have our resident mortgage expert on the show, to go over the implications of this higher interest rate environment that we're in. 

Whether you’re getting a new mortgage, or are considering refinancing, we tackle whether you should go with a variable rate or fixed rate mortgage in this current interest rate environment.

There could also be some new mortgage rules coming out this spring as well, so we cover what those are so that you can be better prepared. 

You might have also been experiencing quite a bit of a payment shock if you hold a variable rate mortgage, with a drastic increase in your monthly mortgage payments. And, if you’re a fixed rate mortgage holder, then you’re not out of the woods either, as when your mortgage inevitably comes up for renewal, you might very well be forced into a much higher rate on your new mortgage than what you’ve been used to over the past few years. We’re going to cover this new challenge that you may be facing, with these higher rates, along with some things you can do to lower your monthly mortgage payments, despite these increases in rates.

Our Guest:

Our guest today is the show’s resident mortgage expert, Sean Cooper. He's who I go to and who I send friends and family to for any mortgage related questions.

Sean is the bestselling author of the book, "Burn Your Mortgage". He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30.

These days, Sean’s helping others burn their mortgages too, as an independent mortgage broker.

Sean has offered to answer for free, any questions that you, the Build Wealth Canada listeners have. I’ve set up a special page for him so all you have to do is go to buildwealthcanada.ca/sean, and there you can send him a message with your questions.

Or, if you prefer, you can even pick a time on his calendar for a phone or video call to get your questions answered with him live, for free.

Sean is a licensed mortgage broker too so I definitely also encourage you to reach out to him if you’re looking to get a new mortgage or if your mortgage is coming up for renewal, as at the very least he’ll be able to provide you with a short list of the best mortgages that he’s been able to find across all of Canada from the 60+ lenders that he monitors.

None of this costs you anything, and there’s no obligation to get your mortgage through him or use any of those suggested mortgages.

At the very least, you’ll get some good education and research on the top mortgages available in Canada right now, you’ll learn what to look for when choosing your next mortgage, and you can always decide later whether you’d like him to help you with the process, or if you want to do it all yourself. It doesn’t cost you anything regardless.

Questions from the Episode:

1. In 2022, the Bank of Canada raised interest rates 8 times. The prime rate went up a whopping 4%. So far we have already seen one increase of the prime rate in 2023. As someone that’s in the industry, what are you hearing and what do you think is in store for mortgage rates in 2023, 2024 and beyond?
   
   
2. With all these mortgage rate changes that we’ve seen in the recent past, what are some considerations when choosing between a fixed rate and a variable rate mortgage?
   
   
3. What’s happening in the real estate market right now (so the first quarter of 2023 which is when we’re recording this episode)? And is now a good time to buy a home?
   
   
4. I heard there could be some new mortgage rules coming out in the spring. Can you tell us about those and how they may affect buyers? 
   
   
5. For anybody new to working with a mortgage broker, can you speak to how it works, and whether you have to pay for the services of a mortgage broker?
   
   
6. What are some ways to qualify for a higher home purchase price, despite the new pending mortgage rules? 
   
   
7. A lot of people are facing “payment shocks” right now. If your mortgage is coming up for renewal in the next few months and you currently are locked into a low fixed rate, you can expect your payment to jump at renewal. What are some things you can do to lower your payment back down?

It's RRSP season here in Canada. Remember that March 1 is the deadline for contributing to an RRSP, and have it count towards your 2022 tax year. 

Also while we’re on the subject, remember that your TFSA contribution room grows every year, and for the 2023 calendar year, you now have an extra $6,500 that you and your partner can contribute each. That's $13,000 total if you both max it out.

Last year the limit was $6,000 per person so the government did increase that by $500 per person for this year. 

I find that these are things that are easy to forget as life gets buys, but I always have reminders set up for these things as, especially in the case of the TFSA, it’s always nice to put in the effort to max that out so that you can get that tax-free growth on that new money invested, all year long.

Since it’s RRSP season, and tax season is coming up, I thought it would be worthwhile to have another successful Canadian Financial Planner on the show, so that we can get a good second opinion on:

·         How much do you need to be financially independent and have the option of retiring?

·         What are some of the sustainable withdrawal strategies that you can use when you’re ready to start living off your portfolio?

·         What is the process and calculations that should be done annually to ensure that you are withdrawing a sustainable amount from your portfolio?

·         And, since our guest has been in the financial planning industry for decades at this point, I ask him if he’s noticed certain patterns when it comes to clients that are successful both financially and in life, versus those that are not. This way we can pick some lessons learned from others, apply them to our own lives, and hopefully avoid some completely avoidable mistakes that others endured before us.

Before we get into the interview, I wanted to invite you to a free webinar and Q&A that I’ll be doing with the actual co-creator of the TFSA.

He’s the former Chief of Staff for the Minister of Finance in Canada. His name is Kevin McCarthy, and if you’ve ever had TFSA or RRSP related questions, or would just like to ask the creator of the TFSA your questions, you can do so at this webinar.

I’ll be there too obviously and so after Kevin goes through his educational presentation where he goes over the RRSP and TFSA fundamentals, as well as the tax deductions and tax credits available to us as Canadians, we’ll then have a live Q&A with him and I and so you can ask him or me your questions when it comes to personal finance, investing, financial independence and retirement, living off your investments, etc.

The session is on February 23, 2023, and it will be recorded so even if you can’t make it live, you can still signup to be emailed the replay once it’s released. 

Also, Kevin has informed me that anyone attending live will receive a downloadable version of his and his team’s proprietary Income Tax and RRSP Tax Savings Calculator.

The link to sign up for free is BuildWealthCanada.ca/webinar.

I look forward to seeing and interacting with you there, and now, let’s get into the interview!

In this episode, I interview one of the most experienced Canadian financial planners that I know, and who I tend to go to when I have any complex tax and financial planning questions. His name is Ed Rempel, and in this episode, we tackle:

• How to determine how much you need to be financially independent?
• What are some sustainable withdrawal strategies that you can use to not run out of money when you’re living off your investments?
• How to pay less tax here in Canada
• And much, much more. 

Thanks so much for tuning in, and please remember to leave a rating on Apple Podcasts or Spotify if you enjoy the show. 

Here are all the questions we cover in the interview:

1. When somebody is trying to determine how much they need to be financially independent and have the option of retiring, what is the process that should be undertaken to figure this out?
   
   
2. What are some of the sustainable withdrawal strategies that you recommend, for those looking to live off their portfolio?
   
   
3. Have you ever used some type of variable withdrawal strategy with your clients where the amount withdrawn every year to live off the portfolio varies depending on how the markets did that year?
   
   
4. Have you ever done any sort of variable withdrawal strategies like using a spending ceiling and floor for the year?
   
   
5. For those that don't feel comfortable going with 100% equities, what do you recommend? Do you change your recommendation depending on what is happening in the bond market? (like with the recent drops)?
   
   
6. What is the process and calculations that you do annually with clients to ensure that they are withdrawing a sustainable amount from their portfolio every year?
   
   
7. When it comes to tax planning and making sure that we’re paying the least amount of tax when living off the investment portfolio, are there any strategies or approaches that you’d recommend?
   
   
8. For those that want to read or watch more of your research and insights, what’s the best place for them to go?
   
   
9. You have so many resources on your website, a YouTube channel with how-to's, where people can learn all about creating a financial plan. Why is it important to also work one-on-one with a financial planner like yourself for example?
   
   
10. You have been in this industry for multiple decades. Would you be able to recommend some resources online that you find to be reliable and reputable sources of information, for those that like to continue to educate themselves when it comes to financial planning, retirement planning, and investing in Canada?