Answering Your Questions on The Marilyn Denis show

On November 10th, we answered your burning financial questions on the Marilyn Denis Show.  Here's a link to the episode (it's the second last one) https://www.marilyn.ca/Full-Episodes/video/Tuesday-November-10-2020-vid2065119 and the questions and answers below.

Carrie's question:  I am a small business owner and my business like many others, has been impacted by COVID.  I have not yet applied for CEBA but saw there were some recent changes to the program. Can you share what those changes are and outline the benefits of the program?     

There’s great news for Carrie and other entrepreneurs and biz owners because CEBA (the Canada Emergency Business Account) has been expanded several times.  That’s why it’s SO IMPORTANT you keep checking with our government at Canada.ca to see if there’s further benefits to support you personally or with your business if you’re still struggling

  • CEBA offers a $40,000 interest free loan – available to small biz and entrepreneurs and non profits that have been seriously impacted by the pandemic and have eligible non deferred expenses.  Again, go to canada.ca for all the details.
  • Now, it’s been expanded to: up to a $60K loan with up to $20k forgivable.  Half of this additional financing will be forgivable if repaid by Dec 31, 2022.
  • Also, application has been expanded to Dec 31, 2020.

You need to really scour the government details for this to make sure you qualify but also, if you do, you’ll receive acceptance through their bank and each bank has some of their own rules.  So, if you’re just applying or have already received your funds, please make sure you read though the document your bank sent you to make sure you’re not missing anything.  For example, with one bank, if you don’t use all of your funds by the end of the year, you won’t have access to them come Jan 1.  It’s not the same with all the banks.  Call them up if you’re unsure.

Lisa's question:  With lower mortgage interest rates, many Canadians are wondering: should I break my mortgage and what's the penalty for breaking a mortgage?

https://youngandthrifty.ca/breaking-your-mortgage-penalties-and-pros-cons/#:~:text=In%20general%2C%20the%20rule%20is%20that%20if%20you,what%20the%20penalty%20is%20for%20breaking%20your%20mortgage.

 With attractive rates beckoning, you may wonder whether it’s worthwhile to break your mortgage contract before the current term ends and switch to a different provider that’s offering a better rate.

In some situations, breaking your mortgage contract could save you thousands of dollars. But that’s not a given, even if your interest rate goes down significantly. That’s because there is a penalty for breaking a mortgage, and depending on the type and size of mortgage you have and the remaining time left on the term, those penalties could be in the five-figure range.

If you want to change the terms of your mortgage before the term is up, you must break your current contract—even if you stay with the same lender. And that can come with hefty penalties

  • It depends if you have a fixed or variable rate mortgage
  • As of 2017, there’s a stress test for new mortgages – you’ll want to ensure if you break your mortgage to get into a new one you can pass the stress test
  • If you received cash back on your mortgage you may have to pay it back if you break the term
  • Remember – a mortgage is there to protect your interest rate and the bank.  If rates go up, the bank can’t change them on you during your term.  But if rates go down and you want to get the more attractive rate, it will cost you.

Prakash's question:  Why is my credit score rated differently with different banks? Is there a reason Why my mortgage payments aren’t reported on my credit report?

Let me back up a bit to answer this question.

  • Your credit score is a reflection of how you’ve handed paying your debts.  It doesn’t reflect your income or net worth
  • There’s two credit reporting agencies in Canada – Equifax and TransUnion.  You can go straight to each for a free credit report – available online during COVID, but if you want you’re credit score from either, you’ll have to pay for it.
  • But, you can get your score for free from various places.  Some online companies are offering it free, but you’re sharing your info with them so be careful.
  • The best place to check your score for free with your bank’s app.  Most allow you to check for free and that’s the safest option other than going directly to the credit bureaus.
  • And, note it doesn’t hurt your score when you check it.
  • To answer Prakash's question, yes, the same score can be viewed as OK by one lender and really good by another.  And, your lender will look for other criteria like your income, amount of debt outstanding and more.
  • So it’s a good idea to check it often and keep in mind – for better or worse, your score is always changing.  Try your best to make payments on time, every time, don’t use too much credit and get help if your debt is getting out of control.

And yes it’s true that your mortgage may or may not be reported on your credit report.  However, that can literally change any time.  So a good rule of thumb is pay all of your bills on time, every time (if you can)

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