Monir and Jackie, both in their 40s, own a new 2-story house in Pointe Saint-Charles. Jackie is expecting their first child in September.

Monir is the co-owner of a real estate company and receives income in the form of dividends from his share ownership. Jackie is a salaried employee of the company with the usual deductions at source.

Jackie earned $76,000 in salary and $7,500 in bonuses in 2021. Monir received a $2.00 dividend per share on his 200,000 shares. Because the company is a Canadian controlled private corporate (CCPC), his dividends are non-eligible.

Jackie made $10,000 of RRSP contributions throughout 2021, and a $6,000 TFSA contribution in December. Monirs income is not considered to be earned income for determination of the RRSP contribution limit, thus his only contribution was to his TFSA of $6,000, also in December.

Monir purchased 2,000 shares of the Royal Bank at $105 early in 2021, and sold them later in 2021 for $135 per share. He also purchased 5,000 share of iShares Global Clean Energy ETF, which he later sold for a capital gain of $32,400. The ETF was held in his TFSA, while the Royal Bank shares were held in a non-registered account. Monir also incurred a small non-registered capital loss of $5,250 on some long-term bonds he had purchased.

Monir had major dental work done in 2021 amounting to $25,000. Their other medical expenses were negligible.

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

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

The couple drew down $80,000 from their RRSPs on July 15 of 2021 under the Home Buyers 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

What is the couples Total Debt Service Ratio (TDS)? Ignore Monirs capital gains/losses.

Calculation of mortgage payment (rounded to nearest dollar)

Calculation of TDS

Part 4

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