Like every Canadian couple, Monir and Jackie carry quite a lot of debt, despite their high income. Both lease their cars
Posted: Sun Jun 05, 2022 7:30 am
Like every Canadian couple, Monir and Jackie carry quite a lot
of debt, despite their high income. Both lease their cars at a
combined cost of $2,300 a month. Their recently-built house carries
a $1,000,000 mortgage at a rate of 2.4%, 5-year term, with monthly
payments over 25 years. Theirs was not a conventional mortgage, but
a high-ratio mortgage at a 90% loan-to-value ratio. Other monthly
debt charges (line of credit, credit card, etc.) amount to $5,000 a
month. Municipal taxes and heating costs amount to $900 a month.
They were First Time Home Buyers.
Part 1 (2 marks) The couple chose to add the CMHC mortgage loan
insurance to their $1,000,000 fixed rate mortgage. However, had
they paid the insurance off up-front, how much total interest would
they have saved over 25 years? Mortgage Insurance Calculation
Part 2 (2 marks – ½ mark each) The couple drew down $80,000 from
their RRSPs on July 15 of 2021 under the Home Buyer’s Plan (Monir
had been an employee in a prior career and had made contributions).
Identify 4 requirements they would have had to meet to qualify for
the HBP. HBP Criteria
Part 3 (2 marks) What is the couple’s Total Debt Service Ratio
(TDS)? Ignore Monir’s capital gains/losses. Calculation of mortgage
payment (rounded to nearest dollar) Calculation of TDS
Part 4 (1 mark) Monir drives a Range Rover that, at the time of
signing of the lease, sold for $125,000. Assuming Monir made a
$5,000 down payment. Other than a low down payment, identify two
advantages of leasing versus purchasing a car. Advantages of
Leasing versus Purchasing
of debt, despite their high income. Both lease their cars at a
combined cost of $2,300 a month. Their recently-built house carries
a $1,000,000 mortgage at a rate of 2.4%, 5-year term, with monthly
payments over 25 years. Theirs was not a conventional mortgage, but
a high-ratio mortgage at a 90% loan-to-value ratio. Other monthly
debt charges (line of credit, credit card, etc.) amount to $5,000 a
month. Municipal taxes and heating costs amount to $900 a month.
They were First Time Home Buyers.
Part 1 (2 marks) The couple chose to add the CMHC mortgage loan
insurance to their $1,000,000 fixed rate mortgage. However, had
they paid the insurance off up-front, how much total interest would
they have saved over 25 years? Mortgage Insurance Calculation
Part 2 (2 marks – ½ mark each) The couple drew down $80,000 from
their RRSPs on July 15 of 2021 under the Home Buyer’s Plan (Monir
had been an employee in a prior career and had made contributions).
Identify 4 requirements they would have had to meet to qualify for
the HBP. HBP Criteria
Part 3 (2 marks) What is the couple’s Total Debt Service Ratio
(TDS)? Ignore Monir’s capital gains/losses. Calculation of mortgage
payment (rounded to nearest dollar) Calculation of TDS
Part 4 (1 mark) Monir drives a Range Rover that, at the time of
signing of the lease, sold for $125,000. Assuming Monir made a
$5,000 down payment. Other than a low down payment, identify two
advantages of leasing versus purchasing a car. Advantages of
Leasing versus Purchasing