Frequently asked questions
Manulife Bank Loans
Unfortunately, you can't change the frequency of your loan payment. However, if you'd like to repay your loan more quickly, you can set up recurring principal payments, or even make one-time principal payments. To do this, give us a call at 1-877-765-2265.
Investment leverage simply means borrowing money to buy investments. When you borrow to invest, you magnify your investment returns because you are investing a larger amount of money. That works for you if your investments are increasing in value and your investment returns are positive – but it works against you if your investments are decreasing in value and your investment returns are negative. Gains and losses are magnified with investment leverage. That’s why investment leverage is only appropriate if you have a higher risk tolerance and are investing for the long term. Also keep in mind that no matter what happens in the markets, with investment leverage you still have to meet your loan and tax obligations.
That depends on your individual situation and we strongly recommend you discuss it with your advisor.
Let’s say two people, Liz and Mike, are both saving for a dream vacation in 10 years. Liz saves up and contributes a lump sum at the end of each year to her non-registered account. Mike borrows $100,000 from Manulife Bank to invest right away. During the next 10 years, Liz contributes $28,991 and pays $555 in tax for a total cost of $29,467. Mike makes interest-only payments of $28,991 and pays $555 in tax for the same total cost. Both investors earn a 5% return on their investments. After 10 years, they sell their investments, pay their taxes and Mike pays off his loan. Liz has $35,066 to spend on her vacation. Mike has $52,277 – over $17,000 more.
This example assumes that Liz makes end-of-year contributions equivalent to Mike’s net cost of borrowing. Mike’s investment loan interest rate is 4.5% and his interest payments are 100% tax-deductible. For both Liz and Mike, the annual taxable portion of their fund return is 20%, the tax rate on income allocations from funds is 30%, and the marginal tax rate is 45%. All assumptions are for illustration purposes only. Results will vary slightly for Quebec residents.
Your contribution limit is 18% of your earned income last year to a maximum dollar amount that changes every year. However, you may be able to contribute much more. You started accumulating RRSP contribution room as soon as you filed your first tax return reporting earned income. Each year after that, you accumulated more contribution room. Now, you can contribute the sum of this year’s contribution limit and any unused contribution room from previous years. Find out how much contribution room you have through the Canada Revenue Agency’s My Account website, MyCRA mobile app or Tax Information Phone Service at 1-800-267-6999.
With a standard RRSP loan, you can borrow up to the maximum RRSP contribution limit set by the Canada Revenue Agency for this year. With an accelerator RRSP loan, you can borrow up to $50,000 and with an accelerator max RRSP loan, you can borrow up to $150,000.
Yes, you can put lump sums towards your RRSP loan and pay off your balance entirely whenever you want. There are no fees for early repayment.
A secured line of credit, like the Access Line of Credit and Access Line of Credit Plus, is guaranteed by assets you own, such as investments or permanent life insurance. If you default on your loan, your investments or life insurance will pay it off for you. The advantage of a secured line of credit is that it generally offers a significantly lower interest rate than an unsecured line of credit.
People often have many different debts, including credit card balances, car loans and student loans. Consolidating debt at a lower interest rate can save you money, and a line of credit makes it easy. First, check to see which debts let you repay early without penalties and fees. Then apply for a credit limit large enough to cover these debts, use your line of credit to pay them off through online, mobile or telephone banking or write a cheque, and simplify your life with one monthly payment at a lower interest rate.
You can lower your limit at any time with a simple letter of direction - a letter that gives instruction letting Manulife Bank know you would like to lower your credit limit. To increase your limit, you have to apply for the extra borrowing room.