Tag Archives: roundups

Back to School and Registered Education Savings Plans

Posted on by

I’ll admit it: Saving for our children’s education was not a priority for me. In fact, I didn’t open an RESP until my oldest child was 9. We had a mortgage to pay, some large expenses the average Canadian family does not have to pay, and RRSPs and TFSAs to fund. We’d also heard quite a few horror stories about group RESPs so we weren’t sure where to start.

When I was ready to commit, I started by reading through the useful and informative articles on Mike Holmes website Money Smarts. I strongly recommend others do the same.

His introductory article How To Set Up The Safest, Simplest And Cheapest RESP Account  is particularly useful to time-strapped worried parents.

What Happens to Your Children’s RESPs if You Die Before They Use Them?

Kati Basi, in a guest post at the Blunt Bean Counter, says:  “Many of my clients assume that their children (as the beneficiaries under their RESP) would automatically receive the RESP upon their death, just as if the children were beneficiaries under their Registered Retirement Savings Plan (“RRSP”). This assumption is, for the most part, dead wrong.” Read how to protect your children’s RESPs, especially the grant money, in “New Will Provisions for the 21st Century – RESPs .“ Then update your will or ask the person who funded your children’s RESPs to update theirs.

Group Scholarship Plan RESPs Versus Bank RESPs

Before banks started offering no fee RESPs where investors could buy GICs or mutual funds, and long before self-directed brokerages allowed RESPs, the only choice most parents had was to enroll in a Group Scholarship Plan. These plans are much riskier than bank RESPs. You don’t get all of your money back if your child does not go on to post-secondary education. You also may have to pay very large fees if you want to transfer your plan elsewhere.

Ellen Roseman details a good example of these unexpected costs in Roseman: [Group Scholarship Plan] RESPs are easy to start and hard to leave.

CBC News provides an in depth look at these group plans in Group RESPs: reading the fine print: Popular plans aren’t for everyone .The plans are not actually evil they just sometimes seem that way particularly if a person signed up for one without really understanding how they work.

Using the RESP Money for Education

Big Cajun Man describes some of his personal experiences with taking money out of his children’s RESPs to pay for their university enrollment. While the government’s required paperwork was short, he was startled at how much other paperwork TD required. So was I! You can read the details at RESP: and More Trees Died.

Related Reading

Join In
Are you contributing to a RESP for your child or children? Or is your plan helping your children pay their way through school? Are you happy with the process? Please share your experiences with a comment.

Mortgage Matters

Posted on by

I have a relative who bought a house in downtown Toronto and paid the entire purchase price in cash. I still can’t quite grasp how he did it. (No, he was not wealthy. He worked in a small retail store. No, it wasn’t in the 1930s either.) For most of the rest of us, a mortgage is an essential for home ownership. Here’s some interesting articles I’ve read recently about mortgage matters.

While personally I disagree strongly with the statement “With the low interest rates available today there is often no benefit in continuing to rent while trying to save 20% to eliminate the CMHC fee.” I found the overview of mortgage types and terms very clear in Boomer’s article: “How To Pick The Perfect Mortgage.”

Collateral vs Conventional Mortgages
One thing that needs an article of its own to explain, however, is the difference between conventional and collateral mortgages. My parents and I had a conventional so I didn’t even know collaterals existed. I think some people are getting themselves into a collateral mortgage without really understanding how it differs from the old kind. In “Decoding Mortgages”  Marketplace tries to clarify the differences, and the disadvantages of collateral mortgages.

Mark Weisleder at The Star also discusses this topic in “Beware the pitfalls of collateral mortgages.” He makes the interesting statement “Some lenders are offering collateral mortgages in a “negative option billing” manner. Unless you are informed enough to say you want a conventional mortgage, you will be asked to sign documents for a collateral mortgage.” Buyer beware indeed!

Home Hunting
Krystal Yee reminds us that we should think about what we really want and need from a home before buying in How I Chose My First Home.Sometimes picking the right home reduces the cost and the mortgage required.

Paying Off the Mortgage
This is a popular topic among finance writers.

The Passive Income Earner summarizes many of the best methods in Mortgage Strategies. He does mention one high risk possibility called the Smith Manoeuvre. May I cordially suggest you don’t try that one? Thank you.

Mortgage Vs HELOC
Jane discusses her challenge in choosing between a Mortgage and a Home Equity Line of Credit, raising important concerns about both in “Maybe I Should Get a Mortgage.”

Related Reading

Join In
Do you have a mortgage? Conventional or Collateral or do you know? Any tips or tricks to share with the rest of us? Please share your experiences with a comment.