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Should GTHA BikeShare Systems be Uploaded to Metrolinx?

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While BikeShare programs are commonplace in Europe, the idea is a relatively recent one in Canada. The first large-scale system, Bixi, was launched in Montreal in 2009, with systems eventually being launched in cities like Toronto, Ottawa, Hamilton, and Vancouver. For those who are unfamiliar with the concept, BikeShare systems are when a company, either owned by a government or private entity, provide bicycles for short-term use, either for a small fee or sometimes for free. Stations are located next to points of interest or at strategic points within neighbourhoods, allowing people to complete all or parts of their trip using a rented bicycle.

A Bike Share Toronto stationA Bike Share Toronto station, image courtesy of Biking Toronto

There are several reasons why municipalities across the GTHA are looking at starting or expanding their own BikeShare systems.

  1. Last Mile: These systems are effective means of dealing with the “last mile” issue that continues to confound transit agencies and governments. By placing stations at strategic points within neighbourhoods and at nearby transit stations, BikeShare can help bridge that gap between the turnstile and your front door.
     
  2. Ideal for Short Trips: They are an effective method of eliminating short car or transit trips. With many transit systems featuring flat-rate fares, taking the subway for two or three stops is often seen as a waste of money. And if that trip is being made by car, particularly in an urban area where parking is either scarce or expensive, it can be a similarly poor financial choice. BikeShare provides an cost-effective and timely way of getting from Point A to Point B.
     
  3. Peace of Mind: Rental bikes remove the worry about leaving a privately-owned bicycle in a place where it could be damaged or stolen. There were 3,728 bikes reported stolen in Toronto in 2016, with only 1% of those being recovered and returned to the owner. A BikeShare bike is only a user’s responsibility from the time it is taken off the station dock to the time it is returned to another station.

Loading a BikeShare bike into a stationLoading a BikeShare bike into a station, image courtesy of Bike Share Toronto

However, these systems do face several key issues, which often hinder their ability to attract new users and to expand.

  1. Barrier to Entry: These services often require potential users to sign up prior to renting a bike, though some systems do have Day Pass options. This presents a barrier to entry, as potential users may not be willing to go through the hassle of creating such a membership.
     
  2. Silos: These services are often run by municipalities, meaning that a membership that is valid in one city in the GTHA is not useful in another. For someone who stays strictly in one municipality, this is not an issue. But for someone who commutes across municipal borders or who perhaps wishes to make a day trip to another municipality, this can be a problem.
     
  3. Coverage: Because these systems are often either entirely municipally-owned or receive a significant amount of their operating subsidy from the municipality, their ability to raise or request capital to expand their coverage area with new stations is often very limited, even if there is strong demand for such a service. The crux of the issue is that these systems are seen by many not as a key part of a municipal transportation system, but as an optional, ‘nice-to-have’ accessory service. As a result, they are often funded as such.

Toronto Bike Share Station MapToronto Bike Share Station Map, image courtesy of Bike Share Toronto

SoBi Hamilton Station MapSoBi Hamilton Station Map, image courtesy of SoBi Hamilton

So how could Metrolinx figure in all of this? One of Metrolinx’s primary goals is to create “an integrated, regional transportation system”. ‘Integrated’ is the key word there, because while advances such as Presto and co-fare agreements have been made on the public transit side of things, the BikeShare landscape very much resembles the old, fractured world of municipal fiefdoms. Having Metrolinx assume control of BikeShare systems across the GTHA would solve many of the issues listed above, and would compound many of the benefits.

  1. Expandability: Should these BikeShare services be brought under the Metrolinx umbrella, they would have access to a far larger pool of funding for capital expansion than under the existing municipally-funded model. They would no longer be viewed as an accessory service, but as a key component of a regional transportation system, catering to both short distance commuting and to recreational trip patterns.
  2. Increased GO Focus: While the GTHA’s current BikeShare systems are focused primarily on serving urban commute and recreational patterns, one advantage that bringing BikeShare under Metrolinx could offer is a new opportunity to expand this service into a new role – increasing access to GO stations.

    Metrolinx-operated BikeShare stations could be installed at key locations within a 1 to 2 km radius of select GO stations, and would provide passengers with active transportation access to those stations. The goal of this service wouldn’t be so much to break even, but rather to offer an active transportation alternative to driving to the GO station. When you consider that the average parking space in a GO parking structure costs over $39,000 to build (yes, that’s per space), and maintenance costs of $100 per space per year for surface and $200 per space per year in parking structures, the expense of operating a BikeShare system should not be seen as an additional expense, but rather as an alternative expense.

    Such a shift would allow Metrolinx to expand into markets which currently do not have BikeShare operations, such as Brampton, Burlington, and Port Credit. In each of these locations, the GO stations are either located within their downtown area or a short cycle away. This geographic convenience could be useful for both daily commuters (those who wish to live in these downtowns but work in a place like Downtown Toronto), and for leisure trips.

  3. Presto Integration: Should BikeShare Services be uploaded to Metrolinx, Presto could become the defacto method with which people access these services. Whether it be pay-per-use with Presto’s existing ePurse, or by purchasing a monthly or yearly pass in the same way that one does today for a transit agency, such a move would allow anyone who currently has a Presto card to access any BikeShare service across the GTHA, significantly lowering the barrier to entry.

    Additionally, co-fare arrangements between BikeShare and transit providers could be established, similar to existing co-fare arrangements. For example, if someone taps out a BikeShare bike and then 20 minutes later taps onto a GO Train, the bike rental fee can be either completely or partially deducted from the GO fare. This would provide incentive for people to use this service as a way of getting to the stations, instead of driving.

  4. Regional Integration: In addition to integrating how people would pay for the service, a key component of a Metrolinx upload would be a harmonization of how people wouldn’t pay for it. Specifically, that a pass holder in Hamilton would be able to rent a bike in Toronto using the same monthly/yearly pass, and would be able to access Toronto BikeShare stations in the exact same way that someone who lives in Toronto and purchased a pass there would. Conversely, someone from Toronto would be able to take the GO Train to Hamilton on the weekend and use their pass to rent a bike to cycle the Bruce Trail if they so desired.

The potential for BikeShare as an important component of the regional transportation system is clear. However, as demonstrated above, the current patchwork model is holding BikeShare back from becoming what it could be.

Have an opinion on the future of BikeShare in the GTHA? You can share your thoughts in our forum thread, or by leaving a comment below.


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Real Estate

5 ways to reduce your mortgage amortization

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Since the pandemic hit, a lot of Canadians have been affected financially and if you’re on a mortgage, reducing your amortization period can be of great help.

A mortgage amortization period is the amount of time it would take a homeowner to completely pay off their mortgage. The amortization is typically an estimate based on what the interest rate for your current term is. Calculating your amortization is done easily using a loan amortization calculator which shows you the different payment schedules within your amortization period.

 In Canada, if you made a down payment that is less than the recommended 20 per cent of the total cost of your home, then the longest amortization period you’re allowed to have is 25 years. The mortgage amortization period not only affects the length of time it would take to completely repay the loan, but also the amount of interest paid over the lifecycle of the mortgage.

Typically, longer amortization periods involve making smaller monthly payments and having a much higher total interest cost over the duration of the mortgage. While on the other hand, shorter amortization periods entails making larger monthly payments and having lower total interest costs.

It’s the dream of every homeowner to become mortgage-free. A general rule of thumb would be to try and keep your monthly mortgage costs as low as possible—preferably below 30 per cent of your monthly income. Over time, you may become more financially stable by either getting a tax return, a bonus or an additional source of income and want to channel that towards your principal.

There are several ways to keep your monthly mortgage payments low and reduce your amortization. Here are a few ways to achieve that goal:

1. Make a larger down payment

Once you’ve decided to buy a home, always consider putting asides some significant amount of money that would act as a down payment to reduce your monthly mortgage. While the recommended amount to put aside as a down payment is 20 per cent,  if you aren’t in a hurry to purchase the property or are more financial buoyant, you can even pay more.

Essentially, the larger your down payment, the lower your mortgage would be as it means you’re borrowing less money from your lender. However, if you pay at least 20 per cent upfront, there would be no need for you to cover the additional cost of private mortgage insurance which would save you some money.

2. Make bi-weekly payments

Most homeowners make monthly payments which amount to 12 payments every year. But if your bank or lender offers the option of accelerated bi-weekly payment, you will be making an equivalent of one more payment annually. Doing this will further reduce your amortization period by allowing you to pay off your mortgage much faster.

3. Have a fixed renewal payment

It is normal for lenders to offer discounts on interest rate during your amortization period. However, as you continuously renew your mortgage at a lower rate, always keep a fixed repayment sum.

Rather than just making lower payments, you can keep your payments static, since the more money applied to your principal, the faster you can clear your mortgage.

4. Increase your payment amount

Many mortgages give homeowners the option to increase their payment amount at least once a year. Now, this is very ideal for those who have the financial capacity to do so because the extra money would be added to your principal.

Irrespective of how small the increase might be, in the long run, it would make a huge difference. For example, if your monthly mortgage payment is about $2,752 per month. It would be in your best interest to round it up to $2,800 every month. That way, you are much closer to reducing your mortgage amortization period.

5. Leverage on prepayment privileges

The ability for homeowners to make any form of prepayment solely depends on what mortgage features are provided by their lender.

With an open mortgage, you can easily make additional payments at any given time. However, if you have a closed mortgage—which makes up the larger percentage of existing mortgages—you will need to check if you have the option of prepayments which would allow you to make extra lump sum payments.

Additionally, there may also be the option to make extra lump sum payments at the end of your existing mortgage term before its time for renewal.

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Real Estate

Mortgage insurance vs. life insurance: What you need to know

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Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you? To start, homeowners have a few options to choose from. You can either:

  • ensure you have mortgage protection with a life insurance policy from an insurance company or
  • get mortgage insurance from a bank or mortgage lender.

Mortgage insurance vs. life insurance: How do they each work?  

The first thing to know is that life insurance can be a great way to make sure you and your family have mortgage protection.

The money from a life insurance policy usually goes right into the hands of your beneficiaries – not the bank or mortgage lender. Your beneficiaries are whoever you choose to receive the benefit or money from your policy after you die.

Life insurance policies, like term life insurance, come with a death benefit. A death benefit is the amount of money given to your beneficiaries after you die. The exact amount they’ll receive depends on the policy you buy.

With term life insurance, you’re covered for a set period, such as 10, 15, 20 or 30 years. The premium – that’s the monthly or annual fee you pay for insurance – is usually low for the first term.

If you die while you’re coved by your life insurance policy, your beneficiaries will receive a tax-free death benefit. They can then use this money to help pay off the mortgage or for any other reason. So not only is your mortgage protected, but your family will also have funds to cover other expenses that they relied on you to pay.

Mortgage insurance works by paying off the outstanding principal balance of your mortgage, up to a certain amount, if you die.

With mortgage insurance, the money goes directly to the bank or lender to pay off the mortgage – and that’s it. There’s no extra money to cover other expenses, and you don’t get to leave any cash behind to your beneficiaries.

What’s the difference between mortgage insurance and life insurance?

The main difference is that mortgage insurance covers only your outstanding mortgage balance. And, that money goes directly to the bank or mortgage lender, not your beneficiary. This means that there’s no cash, payout or benefit given to your beneficiary. 

With life insurance, however, you get mortgage protection and more. Here’s how it works: every life insurance policy provides a tax-free amount of money (the death benefit) to the beneficiary. The payment can cover more than just the mortgage. The beneficiary may then use the money for any purpose. For example, apart from paying off the mortgage, they can also use the funds from the death benefit to cover:

  • any of your remaining debts,
  • the cost of child care,
  • funeral costs,
  • the cost of child care, and
  • any other living expenses. 

But before you decide between life insurance and mortgage insurance, here are some other important differences to keep in mind:

Who gets the money?

With life insurance, the money goes to whomever you name as your beneficiary.

With mortgage insurance, the money goes entirely to the bank.

Can you move your policy?

With life insurance, your policy stays with you even if you transfer your mortgage to another company. There’s no need to re-apply or prove your health is good enough to be insured.

With mortgage insurance, however, your policy doesn’t automatically move with you if you change mortgage providers. If you move your mortgage to another bank, you’ll have to prove that your health is still good.

Which offers more flexibility, life insurance or mortgage insurance?

With life insurance, your beneficiaries have the flexibility to cover the mortgage balance and more after you die. As the policy owner, you can choose how much insurance coverage you want and how long you need it. And, the coverage doesn’t decline unless you want it to.

With mortgage insurance through a bank, you don’t have the flexibility to change your coverage. In this case, you’re only protecting the outstanding balance on your mortgage.

Do you need a medical exam to qualify? 

With a term life insurance policy from Sun Life, you may have to answer some medical questions or take a medical exam before you’re approved for coverage. Once you’re approved, Sun Life won’t ask for any additional medical information later on.

With mortgage insurance, a bank or mortgage lender may ask some medical questions when you apply. However, if you make a claim after you’re approved, your bank may ask for additional medical information.* At that point, they may discover some conditions that disqualify you from receiving payment on a claim.

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Real Estate

5 common mistakes Canadians make with their mortgages

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This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.

Since COVID-19 dragged interest rates to historic lows last year, Canadians have been diving into the real estate market with unprecedented verve.

During a time of extraordinary financial disruption, more than 551,000 properties sold last year — a new annual record, according to the Canadian Real Estate Association. Those sales provided a desperately needed dose of oxygen for the country’s gasping economy.

Given the slew of new mortgages taken out in 2020, there were bound to be slip-ups. So, MoneyWise asked four of the country’s sharpest mortgage minds to share what they feel are the mistakes Canadians most frequently make when securing a home loan.

Mistake 1: Not having your documents ready

One of your mortgage broker’s primary functions is to provide lenders with paperwork confirming your income, assets, source of down payment and overall reliability as a borrower. Without complete and accurate documentation, no reputable lender will be able to process your loan.

But “borrowers often don’t have these documents on hand,” says John Vo of Spicer Vo Mortgages in Halifax, Nova Scotia. “And even when they do provide these documents, they may not be the correct documentation required.”

Some of the most frequent mistakes Vo sees when borrowers send in their paperwork include:

  • Not including a name or other relevant details on key pieces of information.
  • Providing old bank or pay statements instead of those dated within the last 30 days.
  • Sending only a partial document package. If a lender asks for six pages to support your loan, don’t send two. If you’re asked for four months’ worth of bank statements, don’t provide only one.
  • Thinking low-quality or blurry files sent by email or text will be good enough. Lenders need to be able to read what you send them.

If you send your broker an incomplete documents package, the result is inevitable: Your mortgage application will be delayed as long as it takes for you to find the required materials, and your house shopping could be sidetracked for months.

Mistake 2: Blinded by the rate

Ask any mortgage broker and they’ll tell you that the question they’re asked most frequently is: “What’s your lowest rate?”

The interest rate you’ll pay on your mortgage is a massive consideration, so comparing the rates lenders are offering is a good habit once you’ve slipped on your house-hunter hat.

Rates have been on the rise lately given government actions to stimulate the Canadian economy. You may want to lock a low rate now, so you can hold onto it for up to 120 days.

But Chris Kolinski, broker at Saskatoon, Saskatchewan-based iSask Mortgages, says too many borrowers get obsessed with finding the lowest rate and ignore the other aspects of a mortgage that can greatly impact its overall cost.

“I always ask my clients ‘Do you want to get the best rate, or do you want to save the most money?’ because those two things are not always synonymous,” Kolinski says. “That opens a conversation about needs and wants.”

Many of the rock-bottom interest rates on offer from Canadian lenders can be hard to qualify for, come with limited features, or cost borrowers “a ton” of money if they break their terms, Kolinski points out.

Mistake 3: Not reading the fine print

Dalia Barsoum of Streetwise Mortgages in Woodbridge, Ontario, shares a universal message: “Read the fine print. Understand what you’re signing up for.”

Most borrowers don’t expect they’ll ever break their mortgages, but data collected by TD Bank shows that 7 in 10 homeowners move on from their properties earlier than they expect.

It’s critical to understand your loan’s prepayment privileges and the rules around an early departure. “If you exit the mortgage, how much are you going to pay? It’s really, really important,” Barsoum says.

She has seen too borrowers come to her hoping to refinance a mortgage they received from a private or specialty lender, only to find that what they were attempting was impossible.

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