Working with a professional to help you to make sense of your finances can be a wise move, but for this relationship to work effectively it is important that you understand what to expect from your financial advisor.
What can your financial advisor help you with?
- Defining your financial goals and creating a step by step plan or strategy to achieve them.
- Planning for the future, including for retirement, future education or housing needs.
- Choosing the mix of investments and assets that suit your goals, lifestyle, time horizon and appetite for risk.
- Building a solid estate for your family to inherit in the future.
- Choosing the most tax-efficient methods of saving and investing.
What should your financial advisor inform you of?
- The range of services that they offer and how much and by which method you will compensate them.
- Your mutual responsibilities and obligations towards each other.
- What the planning process will look like and the documents that they will provide you with.
What will your financial advisor need from you or need to ask you about?
- What your financial goals are.
- What your personal circumstances – such as your marital status, any dependents, your job, earnings and tax situation.
- Any investments or assets that you currently have – such as registered accounts, workplace pensions, property etc.
- Your appetite for risk and investment preferences.
- Information on your income and also your outgoings, including debts such as mortgages, loans or credit cards.
- Whether or not you have a will, and its contents.
- Your estate and inheritance planning situation.
If you’re looking to achieve your financial goals, talk to us. We can help.
Buying a home: 5 questions you need to ask yourself
Are you sure you’re ready for this major financial decision?
Purchasing a home is one of the biggest financial decisions most of us will ever make. Taking that big leap into the world of mortgage payments and real estate taxes, therefore, needs some serious consideration and preparation. Whether you’re purchasing your first home or ready to finally buy the house you’ve always dreamed of, ask yourself these five questions.
Question #1: What’s my credit rating?
Before applying for a mortgage, your credit rating must be equal to, or even above, current market requirements. This will help ensure that you get the best rates. Improve your chances by checking your credit reports for any old, paid or settled debts that are incorrectly pulling your credit score down. Having fewer or no new major debts at least a year before you apply for home financing also puts the odds in your favor.
Question #2: What price range can I actually afford?
Your dream home could turn into a financial nightmare if you end up with a mortgage you can barely afford. Personal finance experts and regulatory boards agree that you should budget no more than one-third of your income (around 28 to 31 percent) for home expenses. This should include taxes, utilities, insurance and other housing-related expenses. You can practice by calculating your projected mortgage payments, plus other expenses. Subtract your current housing expenses from this number and keep it in the bank. If it starts to get uncomfortable, then maybe you need to reconsider your housing price range. Prospective creditors will also ask this question. To answer this, let your financial track record speak for itself. Ideally, you should have enough savings to cover at least three to five months of mortgage payments. This will improve your chances of getting approved for a housing loan, as it shows that you aren’t living from paycheque to paycheque and that you can afford not only the monthly payments but also emergency expenses such as repairs and maintenance.
Question #3: Can you build a healthy savings account?
You may save money in a tax-free savings account (TFSA) or withdraw from your registered retirement savings plan (RRSP) through the Home Buyer’s Plan (HBP).
Question #4: Can I afford the down payment and other upfront fees?
You will most likely need to have at least 5 to 20 percent of your future home’s purchase price. You should have enough money saved to pay for the down payment as well as other fees such as closing costs. Some sellers would agree to share the closing costs, so you may consider this as an option when budgeting. You may take advantage of available federal programs to help you with this.
Question #5: Am I ready to apply for mortgage pre-approval?
Before you start the pre-approval process, make sure you have all the necessary documents. The Canada Mortgage and Housing Corporation (CMHC) requires you to present the following:
• government-issued photo ID
• contact information for your employer
• proof of address
• proof of income
• proof of down payment
• proof of savings and investments
• details of current debts
• your credit score
A pre-approved mortgage will help you narrow down the price range of your future home. It also indicates interest rates and monthly payments. Make sure that all your documented information is accurate. Misrepresentation of assets and income to secure a mortgage is considered a serious offence.
Question #6: Do I really like this house?
Now that you’ve got all the financing requirements ready, don’t make hasty decisions on what house to purchase. Consider not only your current housing needs, but also your family’s future needs. Before getting too excited about a good bargain, try to take an objective look and figure out if you’ll be happy with your decision over the next few years.
As our lives grow and change with variable circumstances, new additions, and job transitions, our needs for insurance will also evolve. Additionally, economic fluctuations and external circumstances that influence your insurance policy will need frequent re-evaluation to ensure that you are making the most appropriate and financially favorable decisions. Perhaps you aren’t sure whether you should conduct an insurance audit or not. The following scenarios are usually a good indication that you should thoroughly assess and review your current policy contract:
- Bringing new life into your family? A new baby may not only prompt you to adjust your beneficiary information, but it is likely to change or influence your coverage needs.
- Changing jobs? Probationary periods may not provide the same level of disability or accident insurance.
- Is your policy nearing the end of its term? Be sure to compare prices for new policies as they can sometimes be more affordable as compared to renewing the current plan.
- Has your marital status changed? Your insurance policy will likely need updating to reflect such.
The specific type of insurance policy you carry as well as personal details certainly influence coverage and premium prices, so if any of the following factors apply to you, be sure to update your policy accordingly. You might be eligible for a rate reduction.
- Changes to your overall risk assessment like smoking cessation, dangerous hobbies, high risk profession etc.
- If you have experienced improvements to a previously diagnosed health condition.
- Do your policy’s investment options still fall in line with current market conditions?
- Have you used your insurance policy as collateral for a loan? Once that loan is paid off, collateral status should be taken off the policy.
Insurance policies generated for business purposes should also be regularly reviewed to make sure the policy still offers adequate coverage to meet the needs of the company and includes the appropriate beneficiary information. With life happening so quickly, it can be easy to forget about keeping insurance policies up to date, however, major changes can have a profound impact on coverage and premiums. Be sure to conduct insurance audits often to ensure your policies are still meeting your needs.
Contact us to see how we can help.