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When job losses happen in any province, all of Canada suffers

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You could almost hear Albertans’ eyes roll in unison this week, as Unifor president Jerry Dias exited a meeting with Prime Minister Justin Trudeau, stood before the national press gallery and described the auto-manufacturing sector as the “most important industry in the country.”

The sense out west was: Of course an Ontarian would say that.

It’s understandable how Albertans could be aggrieved by the national urgency expressed at the potential loss of 2,500 General Motors jobs in Oshawa while its oil industry shed that many jobs every month, for 18 straight months, during the height of the downturn.

The comparison wasn’t lost on Alberta Premier Rachel Notley, who said in a speech Wednesday that the “the federal government should be at the table” when it comes to Alberta’s economic woes.

The word on the street in Calgary was a little more blunt.

“Sorry, Oshawa losing 2,500 jobs,” read a bright yellow sign held high at a downtown protest. “Alberta lost 110,000!!”

That actually understates the case.

From January 2015 to October 2016, Alberta employers slashed more than 130,000 payroll jobs. That doesn’t include all the self-employed people whose gigs also went bust amid the crash. And, for the record, the oil and gas industry is six times larger than the auto-manufacturing sector, in terms of its contributions to Canada’s GDP.

These are important facts to be aware of. They are relevant to public policy. When weaponized, however, they can be harmful to the public discourse.

Venting frustration is one thing. But turning layoffs into a regional competition can mask the real pain of job loss, regardless of geography. It can obscure how interconnected our national economy actually is. And it can get in the way of finding real solutions for those most affected, who might actually have more in common than they realize.

The numbers vs. the nuance

Amid the wall-to-wall coverage of the GM news, University of Calgary economist Ron Kneebone struck a nerve on social media with a cheeky reality check, noting that Alberta’s total job losses at one point during the recession amounted to “the equivalent of 2.96 GM plants every month.”

“Just sayin’,” Kneebone added.

Mike Moffatt, of the Ivey Business School in London, Ont., felt compelled to reply with some data of his own, pointing out how much Ontarians have suffered through the decline of manufacturing, more generally, over the past couple of decades.

Pro-pipeline protesters gather in Calgary Tuesday. The Alberta oil industry shed about 2,400 jobs every month during its downturn. (Jeff McIntosh/Canadian Press)

“I think there are some misconceptions about what’s been happening in Ontario,” Moffatt later explained.

“There’s this idea that the federal and provincial government came running at the first sign of manufacturing job loss — and that’s simply not true.”

People tend to focus on the auto-sector bailout that came in response to the 2008 financial crisis, Moffatt said, but forget that Ontario lost 250,000 manufacturing jobs in a span of less than four years leading up to that.

“It was pretty bleak times in Ontario manufacturing for years, and then we got hit by the financial crisis,” he said.

Moffat’s response to Kneebone on Twitter garnered a lot of attention of its own, largely among Ontarians but also from Kneebone, himself, who called it a “very good” discussion.

“It was never my intent to suggest a competition over job losses,” Kneebone said.

And yet, that’s how many people — especially in Alberta — are treating the GM layoffs.

Regional divides and human nature

The frustration is rooted in a sense among many Albertans that not all economic pain is treated equally in this country.

Like sports coverage of the Leafs, news coverage of Ontario’s economic woes can seem disproportionate to Western audiences.

To a certain extent, this is to be expected. It’s human nature, after all, for nearby problems to appear larger than faraway ones. And the humans who work in national media tend to live in Ontario more than anywhere else.

Our emotions also tend to be biased toward stories over numbers. So a singular event such as the sudden closure of the main plant in a company town tugs on heartstrings in a way that months’ worth of accrued data cannot.

“The sticker shock is pretty big when a big plant like that closes,” Kneebone said, recognizing the sudden impact the loss of GM will have on a community like Oshawa, as compared to the extended bleed-out of oil jobs in Alberta.

Prime Minister Justin Trudeau and Unifor national president Jerry Dias make their way to a meeting on Parliament Hill on Tuesday. (Fred Chartrand/Canadian Press)

But what about the rhetoric? What about the union boss declaring the auto sector the “most important industry in the country” as if it were a simple matter of fact?

Moffatt bristles at this.

Asked if there’s any evidence to back Dias’s claim, he sighed deeply before replying.

“I actually just don’t think that type of talk is helpful, to suggest one industry is more important than another, or one job is more important than another,” he said.

“I think the worst thing that we can do is pit manufacturing workers against workers in the oil industry.”

Common ground

Granted, some Canadians roll their eyes when Albertans complain about financial woes while the province still enjoys the highest wages in the country.

But Moffatt says, many Ontarians, believe it or not, have sympathy for what laid-off Albertans have been going through.

“We absolutely feel for what’s happened in the oilpatch because we’ve dealt with similar things in the past,” he said.

And it’s not just a theoretical sort of understanding. There’s a very practical kind, too.

Many chemical manufacturers in Ontario, he said, rely on inputs from Alberta to create their products. And frequently when Ontarians can’t find work in the province, they head west to launch new careers.

Ontario was the No. 1 source of interprovincial migration to Alberta from 2006 to 2009, and from 2012 to 2016.

Assembly-line workers at the General Motors plant in Oshawa work on cars in this file photo from December 2011. (Chris Young/Canadian Press)

“The one advantage that Ontario had during our decline is that many of our workers ended up taking jobs in the patch,” Moffatt said.

“And I think that’s one of the big challenges for Alberta right now. Alberta doesn’t have an Alberta, if you know what I mean. There’s nowhere for those workers to go when there’s a decline.”

The escape hatch that Alberta offered to laid-off Ontarians was particularly helpful to younger male workers who had opted for high-paying jobs on an assembly line over post-secondary education, Moffatt said. Many suddenly found themselves with few comparable opportunities in Ontario once their plants shut down or they were replaced by robots.

Kneebone says young men in Alberta now face a strikingly similar situation, but their options are more limited.

The evidence, he says, is in the increasing duration of unemployment in Alberta and the growing caseload of single people on the province’s social assistance rolls.

“These guys — and I’m going to guess that they’re guys, and I’m going to guess that they’re young guys, and I’m going to guess that they’re in the oil sector — they’re not going to get the jobs back,” Kneebone said. 

“And this a real concern.”

The solution, Kneebone believes, lies in more generous and more specifically targeted employment insurance benefits, rather than in large-scale government bailouts.

And while it’s been apparent for some time now that many of the high-paying jobs that used to exist in the oilpatch are likely never coming back, it’s still tough for many Albertans to get their minds around that reality.

Here, too, Moffatt says Ontarians can understand.

“Growing up, pretty much everyone I knew, their dad worked in a factory,” he said.

“It was a core part of our identity. In southwestern Ontario, we made things. And that’s something you hear over and over and over again in the community … we don’t make things anymore.”

This transformation started decades ago, Moffatt said, but Ontarians are still coming to terms with the change. So while the GM news may not have come as a surprise to those following macroeconomic trends in manufacturing, it still came as a shock to people in Oshawa. It was an assault on their identity as much as their livelihoods.

As Albertans, we’re staring down the immediate prospect of a protracted period of constricted transportation for our primary resource — and, in the long term, a world that’s looking to shift away from fossil fuels. These are transformations we’ll have to reckon with in our own way.

In the meantime, though, many would love to see a little more understanding — and little less eye-rolling — from the rest of the country.

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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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