Bank of Canada Hikes Interest Rates - What that means to you

Finally the time has come, Bank of Canada today announced its overnight interest rates hike from 0.5% to 0.75%.

Bank of Canada became first country after USA to announce the rate increase and it has done so after a big gap of 7 years since 2010.

Although its a good sign to showcase that Canadian economy is growing but also has some impact on credit holders in Canada. I have outlined few major impacts which common people will have after this hike announcement:

1. Mortgages

Most of the Canadians are under mortgage, those who are under a fixed term contract (Closed Mortgage) still have some time till their renewal to relieve but those who are under Variable Rate Mortgage will get impacted instantaneously.

Monthly mortgage payments will be higher for Variable Rate Mortgages.

2. Home Equity Line of Credit

People who use their equity built up in their home for borrowing money and use the same; will have to pay higher interest rates which means higher monthly payment for repayment.

3. Credit Cards

Well Credit Cards already have pretty high interest rates and are most unlikely to be impacted due to this rate hike.

So, good news here !

4. Lines of Credit

Canadians using Lines of Credit for borrowing will be paying higher interest rates.

5. General Loans

Other general loans like Personal Loan, RRSP Loan etc. will get impacted and bear higher interest rates.

6. Automobiles Loan

Already auto loans bear higher interest rates due to they being unsecured loans. After this rate change the interest rates will be more high.

7. Students Loan

Students are not required to repay their loans back until after 6 months of their graduation. People who have to start repaying their loans in near future will bear higher interest rates.

8. Saving Bank Account

Good news here is that Canadian savers who prefer to put their money in Savings Account will get higher interest rates hence more savings. Also TFSA rates seems to be impacted on a positive side.

9. CAD - USD Exchange Rate

Canadian Dollar seems to be progressing and might see a higher valuation against US Dollar. Hence people looking to visit US for shopping spree or luxury can plan their trips which will be more economical.

10. Foreign Funds Transfers

Immigrants from other countries living in Canada who remit money to their home country will get more value per Canadian Dollar as CAD is expected to rise in Forex market. So, some relief here too.

Let me know if you have any questions on above; I work in Capital Markets and have over 10 yesr of experience in same.

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How to buy home/condo in Toronto with less or no money in pocket

 Home .Condo.. House.. Toronto.. GTA

People living in this part of world must be totally aware about above words as these are talk of the town now a days. Everybody is talking about rising house/condo prices, number of sales and buys in housing market, TREB numbers, home prices drowning etc.. etc..

Everybody is taking about expansive homes (which were not this way before), but nobody is talking about people who started saving for their dream home two or three years before thinking that they would have enough by now to put down payment for buying their home.

Dreams have shattered, things have gone upside down.

Well I might have something to patch up your dreams and help you get money to buy your home, it is a tried ans tested method and believe me I bough my first home using this method and just sold it making a profit of more than 200K.

Hope this way works for you also.

To get this method working, you must satisfy following criteria:

Have Excellent or Very Good Credit Score
Must be a "First Time Home Buyer"

1. RRSP Loan

RRSP loan is the loan offered by all financial institutions to borrow money from them and invest in RRSP. It's an easy deal to crash as the money remains with financial institution only in your RRSP account.

Take this loan and put into RRSP, it's better you put 25K each in yours and your spouses's account and keep that amount invested in your RRSP for at-least 90 days. This is the first step towards success.

2. Take out RRSP Amount

Once 90 days are over, you can take out the amount you invested in RRSP under "First Time Home Buyer" option.

Don't worry, it will not count towards your income and you will not incur any additional tax on this amount. Just remember that you can withdraw maximum 25K from each person's RRSP account under "First Time Home Buyer" program.

Now you have 50K additional money to put towards down-payment of you new home or condo.

That's not it, go through point 3, this is the most exciting part.

3. Tax Benefits 

Now that you have taken out your RRSP; it's time to reap TAX benefits. Even though you have taken out the amount under RRSP, you can still claim the tax refund during tax filing to CRA.

Refund on 50K must be approx 15K dollars.

So you borrowed 50 K and you got 65 K, its like icing on cake.

So, hope this method works for you, enjoy your new home..

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