Joint Mortgages – The Positives And The Pitfalls

What Is A Joint Mortgage?

Taking out a mortgage is an almost indispensable part of buying a house for many individuals. Those of us who have been party to a windfall via inheritance, as a prize or a bonus may be able to pay directly by cash to own the house we want. The rest of us will need, as most people do, to find a mortgage that suits our needs and our means.

Mortgage borrowing is quite unlike any other kind of borrowing. The amounts are higher than any typical loan or credit line, and consequently the term of the loan will usually be longer. As the term is longer, this means the scope for default is consequently larger. With the larger scope for defaulting on a mortgage comes the need for banks to cover themselves before lending. The outcome of this is that if you cannot meet mortgage payments, your home is at risk.

With the higher level of commitment and its knock-on effect on just about everything you could possibly think of, the amount of thinking that needs to go into taking out a mortgage naturally will increase. Although all you really want is to buy a house, you need to stop and think about what the best way of going about things will be. Can you afford to take a mortgage that will secure you the house you really want? How sure are you that the payments you can make today will be affordable five years from now, or ten years, or twenty? If borrowing to buy a house will really over-stretch you, you may need to take a different angle.

The angle that people will traditionally take – if they find that their borrowing ability is not conducive to buying a house alone – is to look at taking a joint mortgage with someone else. If the house purchase is part of a couple, married or otherwise, trying to set up home together, then there may be an obvious situation. In some couples, though, only one is gainfully employed and eligible to get a good mortgage deal. In others, it may be that one of the partners has poor credit history, which will lead any lending institution to either decline the application or at the very least put restrictive terms on it.

Some people will choose to co-sign for a mortgage with a parent or other older relative. In these cases, assuming that the elder party is “young enough”, there is a lot of scope for a good deal. However, it is important to realize that although a joint mortgage brings in two different incomes, two different histories and two different brains, it also encompasses two different personalities – and if at any point those two personalities start to clash, there will be problems in the operation of the account that could make an individual look like the most secure borrower of all. If borrowing as joint mortgage account holders it is important to take account of this, and make sure the loan is flexible.

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A Global Recovery Without Growth

OECD Expects A Period Of Stunted Growth Over The Course Of 2010

The good news first, so no-one loses hope: Next year will see, in Canada and the rest of the industrial world, an economic recovery from the recession we currently find ourselves in. Now, the bad news: there will be little or no growth in the economy as part of this recovery. So says the global Organization for Economic Co-operation and Development in a report published this week which will leave many people wondering whether to smile or frown. The general consensus has been that the recession is heading for an end later this year with a cautious but pronounced period of growth next year. The Bank of Canada for its part claims that growth may even reach 2.5%, but the OECD thinks differently.

This report seems to be more pessimistic in general than the assumptions of the World Bank, with the OECD expecting a period of stunted growth over the course of 2010 which will see the Canadian economy grow by a small margin of 0.7%, lower than the USA’s figure of 0.9% and the world in general at 2.3%. The World Bank, which does not have a breakdown for Canada, expects the US to have growth of 1.8%. Things could be worse of course as, according to the OECD, the United Kingdom will experience no growth at all. It should also be noted that the OECD forecast is just one of many, and the most pessimistic of them all so far – forecasts certainly do not always reflect the eventual truth.

What does seem universally accepted is the belief that the latter part of this year will see an end to the market contraction which has characterized 2009. Aside from that, it is difficult to know what to believe, with market figures completely failing to provide a uniform indicator of how the future will pan out. Goods and retail purchases have been rising in Canada and above, for example, but the housing market, particularly in the United States, has failed to perform as well as had been hoped. Reading the trends is likely to remain a lottery for some time to come, although news that the recession is soon to be over will hopefully become a self-fulfilling prophecy, with consumer confidence expected to grow as a result.

On the last point, the OECD and the World Bank seem at least to be of one mind. The global recession does not have long to run, whichever way you read the figures. OECD member countries have seen market contraction in the region of 4.1%, expected to be the overall figure for this year. In March, this figure was estimated at 4.3%. Given the horrors of 2008 and much of this year, the recession was inevitable, but it looks to be nearing its end. Economic strategists seem to be of a single mind on stimulus packages too, giving the concept a cautious thumbs up, urging that the governments implement the programs included under those packages, and advising against further action to pump economies up once recovery does appear – correction is good, micro-management may be detrimental.

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What Is A Mortgage?

Mortgage 101

You would be surprised indeed to know that a great many people do not really know what a mortgage is. If you are one of those people, don’t feel too bad about it. You’re in good company, and quite numerous company at that. For one reason or another, in early years we don’t learn that much about private finance. In school we’re busy learning reading, writing and arithmetic, then sciences, languages, history and so forth. Then it’s off to college where we specialize  in whatever we were really good at when we were at high school. After college we’re more concerned about finding a job than anything else, so by the time we get to actually dealing with buying a house we’re into our twenties and heading rapidly for our thirties.

It is therefore entirely possible to get to a certain stage in your life and all of a sudden realize that these “mortgages” of which so many of your contemporaries speak are actually an entirely foreign topic to you. You know they have something to do with houses and money, and you can probably assume that they are involved in making available the money to buy a house, but there is a whole lot more involved. Although you may well be fully aware that there is a lot more to mortgages than that, it may not be immediately clear to you what that “more” constitutes. Here are some of the basic, yet important, facts and details about mortgages.

· A mortgage is a loan taken out with the express purpose of buying real estate (see? The money-house thing was right.)

· The loan is usually paid back over a term of twenty five + years. Government plans and guidelines hint that they would prefer to make the maximum term somewhat shorter.

· Given the large amounts of money lent in a mortgage, and the extensive period of time over which they are paid back, the bank asks for security on the loan. This is almost always taken in the form of the property the mortgage is taken out to buy.

· As the above suggests, failure to maintain payments on a mortgage will possibly result in the bank taking ownership of the house via a “repossession” or foreclosure.

· The banks are then required to make the house ready for sale and take care of the sale themselves at a reduced price – therefore they prefer to look for a way of agreeing a reduced payment until the customer can pay the full amount.

At the end of the mortgage period, congratulations! You are the owner of the house you bought all those years ago. Prior to that it is part-owned between yourself and the bank, but as long as you choose a mortgage on which you can realistically keep up with payments there is no reason why you need worry. Common sense plays a huge part in picking the right mortgage, and as long as you apply your brain when choosing you should stand a good chance of keeping ahead of the game. Just make sure you have a fall-back if times get tough.

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Personal Finance and Kids

Kids Need to be Taught About Money

The Alberta Finance Minister has said that both parents and the government need to take a firm hand in teaching kids how to be financially responsible now and in the future. With the current global financial situation having some bad news for everyone, even among the growing number of positive signs, it is now viewed as absolutely essential that sound financial planning is given the emphasis it requires at all levels, rather than leaving children to find out about the intricacies of the subject first-hand when they leave college and start looking for work. The minister, Iris Evans, said that her own children – all of whom are now grown up – have succeeded in life because she made sure to teach them about money.

Although not everyone would agree with the entirety of the Minister’s speech – which made great play of the importance of each family having at least one stay-at-home parent – the message of teaching children about money and how to handle it is one that will surely recur as we work to get out of the troubled financial climate of the present. At least some of the problems that the world is currently dealing with have something to do with irresponsible consumer borrowing and spending, and if good habits are locked in at an early stage then there is all the more chance that financial crises like the present one will be rarer and shallower in future. What the government may do remains to be seen, but there are plenty of things that a parent can do to instill the right habits in their offspring.

Savings accounts are something that will often be encouraged for the very youngest kids, but when they get to around the early teens the interest seems to drop off quite considerably. Finding a way to encourage your teenage child to save and pay close attention to the value of money is not difficult. All that one needs to do in the present climate to make one’s children pay heed to the importance of sensible financial practices is watch the news with them. As banks, businesses and other organizations battle the ill-effects of financial laxity, there has never been a better opportunity to pass on a message of caution.

It may be increasingly difficult in this day and age to avoid debt in one’s everyday life – particularly if one intends to make a go of a business career at any point – but a bit of financial wisdom can give the children of today the thought processes to deal with the future in a mature and secure way. Don’t teach them to be afraid of debt, but to understand good and bad debt. Don’t let your children see loans as free money, nor see savings as being boring or cheap. Good financial sense starts at an early age, and with a bit of forward thinking can lead to a very satisfactory future. Instilling these messages will mean less likelihood of a repeat of what we are currently dealing with.

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TD Bank Simply Save Program Offers $200 For Free – But Is It Worth It?

TD Launches Simply Save Program

In the past, I wrote about Scotia Bank The Rest Savings Program. Just recently, TD Bank launched a similar program called Simply Save Program. TD Canada Trust customers will be able to automatically save each time a transaction is made.

The Simply Save Program automatically transfers money (from $0.50 to $5) from your TD chequing account to a TD savings account of your choice, each time a transaction is made. Transactions can be a debit purchase, ABM withdrawal or both. You can pick savings accounts such as TD TFSA Savings Account, TD daily interest savings account, or even someone else’s savings account.

TD is offering a special bonus for a full year – if you sign up before July 24, 2009. Every time you accumulate $100 in Simply Save savings, TD will add a $10 bonus, up to $200. This does not sound bad, after all, who does not want free money? However, if you do some calculations, to get free $200, you need to do the following:

In one year:

You need to save = $2000
To achieve that, you need to do = 400 transactions (must save $5 per transaction)
That’s about 34 transactions a month
Roughly One transaction each day

So, you can get this $200 for free if you are willing to do a transaction daily. If your TD bank account does not have unlimited transactions, it is likely that you will end up paying more than $200 to get $200. Is it worth it? I will let you decide (depending on type of bank account you have + other factors). Visit Td Canada Trust for more information. Always do your homework before making any financial decisions.

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Government Unveils Second Quarterly Progress Report

Back in January, when Finance Minister Jim Flaherty unveiled the government’s $22.7 billion stimulus plan, there was a little bit more work to do – steering it through parliament. This was no small matter, as the opposition Liberal party reserved the right to puncture the entire plan and potentially bring down the minority Conservative government. In return for not doing so the liberals demanded, among other things, quarterly progress reports on how the stimulus was working out. Thursday the 11^th was the date for the second of these reports, and Prime Minister Stephen Harper duly delivered a report which contained no earth-shattering news but a good deal of broadly positive information.

The headline news of the second progress report included the announcement that 3,000 or more infrastructure projects are being or have been started. Pointing out that that counts for a lot just 72 days into the new tax year, Prime Minister Harper added that four fifths of the proposed funding mentioned in the plan have already been allocated. As far as new announcements went, the report was mot forthcoming, concentrating instead on a review of what has been done, and a recognition of what remains to be done. The report came in the wake of the Prime Minister advising his opposite number in the Liberal party, Michael Ignatieff, to avoid doing anything rash. For Prime Minster Harper’s words – an entreaty not to put the public through another election – it is possible to read another interpretation: “Please don’t trigger another election, because I will probably lose it”.

There is a good deal of positive acknowledgement for what PM Harper is asking – changing governments in the middle of a recession is always risky, but there also seems to be some recognition of the embattled position in which the premier finds himself, with him saying “the only thing that can get us off course now is political instability.” A simple message, but with the underlying threat – “destabilize things now, and suffer the anger of the public when it takes longer to get out of the recession.” As of this moment, neither Ignatieff nor his party have spoken specifically about whether the stimulus report gives enough reason to refrain from pulling the plug on the government.

Among the other major news in his speech, Prime Minister Harper took time to mention the changes made by his party to Employment Insurance. At such a crucial time for business survival, layoffs are to be expected. With unemployment at an eleven-year high and threatening to escalate, it will be more important than ever to prioritize Employment Insurance, and the government is set to spend a further $5.5 billion making sure that insurance is secure. With a deficit set to reach $50.2 billion for the current year, Finance Minister Flaherty has promised that Canada will get back in the black, but made no specific promises as to when. The initial timetable of a return to surplus in 2013 has not been repeated, leading some to question whether it is possible.

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The Spring 2009 Toronto Small Press Book Fair

The Spring 2009 Toronto Small Press Book Fair In HD – Long Version

The Spring 2009 Toronto Small Press Book Fair – Short Version

The Spring 2009 Toronto Small Press Book Fair took place at the Toronto Reference Library, 789 Yonge St. Toronto, ON, M4W 2G8. From 9am-5pm on Sat, June 13, 2009. I participated in this event, and I am posting two video clips for your viewing pleasure. The weather was nice (23 °C little wind) and lots of visitors attended the fair.  The Small Press Book Fair featured lively entertainment such as eclectic readings, performances, raffle draw etc. For the first time in our 22-year history, the TORONTO REFERENCE LIBRARY agreed to host the 2009 Toronto Small Press Book Fair! This was a Unique Opportunity To Meet Canadian and International Celebrity Authors Under One Roof. Celebrity authors such as Kieran Furey, Kildare Dobbs, Goran Simić were featured.

I like attending this kind of event, and I encourage entrepreneurs to join any events like the one we had today. It presents an opportunity to meet many other like-minded people and it will increase your networking capability which is very important.

The video was done with a MoviePix MP5A4 HD cam. For more pictures and video clips, visit A Dawn Journal on  Flickr, and YouTube. Also, visit The Toronto Small Press Group Website for more info.

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