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What a far-right Bolsonaro presidency in Brazil means for Canadian business





Jair Bolsonaro, a far-right, seven-term congressman, won Brazil’s presidential election Sunday, giving him a convincing mandate to radically alter politics in Latin America’s most populous country.

Critics at home and abroad have lambasted the former paratrooper for his homophobic, racist and misogynist statements and his support for Brazil’s military dictatorship that ruled from 1964 to 1985. Supporters backed his pledge to crack down on crime and battle government corruption in South America’s largest economy. 

For Canadian business, a Bolsonaro presidency could open new investment opportunities, especially in the resource sector, finance and infrastructure, as he has pledged to slash environmental regulations in the Amazon rainforest and privatize some government-owned companies.  

“It could be a good time to be a mining investor in Brazil,” said Anna Prusa, a former U.S. State Department official who now researches Brazil at the Wilson Center, a Washington, D.C.-based think-tank. “Bolsonaro has said pretty publicly he would like fewer restrictions … he is a recent convert to market liberalism.” 

Critics say investors, particularly in the resource sector, will be profiting from the destruction of the Amazon, the world’s largest rainforest, at the expense of the local Indigenous people and the planet’s health.  

Here’s what Bolsonaro’s win could mean for Canadian business: 

Trade and investment

Canadian firms invested about $11.5 billion in Brazil last year, accounting for about one per cent of total foreign investment abroad, according to Global Affairs Canada. It’s mostly in mining, infrastructure, machinery, finance and technology, said Jean Daudelin, a Brazil expert at Carleton University.

Notable investments by Canadian firms in Brazil include Brookfield Asset Management, a Toronto-based property and infrastructure company with more than $40 billion invested in the South American giant’s shopping malls, homes and oil pipelines, according to Reuters.

Artisanal miners separate gravel with sieves as they search for diamonds at an abandoned mine in Areinha, Minas Gerais state, Brazil. Canadian mining companies are likely to benefit from a Bolsonaro presidency, analysts said. (Felipe Dana/Associated Press)

Brazil was the 13th-largest recipient of Canadian direct investment abroad. About 500 Canadian companies are active there.

As large countries exporting primary commodities, Brazil and Canada have frequently clashed on trade. In some respects, they’re natural competitors, particularly in agricultural products and mid-sized jet manufacturing.

Brazil invested $18.2 billion in Canada in 2017, accounting for 2.2 per cent of the foreign direct investment coming into the country, according to Global Affairs. Vale, a mining giant partially controlled by the Brazilian government, is arguably the highest profile Brazilian investor in Canada, with major nickel operations around Sudbury, Ont.

Bolsonaro’s victory is not expected to radically alter trading relations, said Daudelin. But Canadian companies in mining, agriculture and infrastructure could see new opportunities if Paulo Guedes, Bolsonaro’s chief economic adviser, is given full control over investment policy.

Holding a PhD in economics from the University of Chicago, Guedes has pushed for a wave of privatizations across Brazil’s state-dominated, highly regulated economy. He helped rally the country’s initially skeptical business class behind Bolsonaro, whose own economic leanings are thought to hew closer to Latin America’s past military leaders, favouring state intervention in the economy and control over what they consider strategic sectors like energy.  

A deforested area is seen near Novo Progresso, in Brazil’s northern state of Para, in 2009. Deforestation is expected to increase under Bolsonaro. (Andre Penner/Associated Press)

“Brazil has been opening up a bit recently,” said Prusa. “Foreign companies have been bidding for railroads and port contracts. I think there is space for foreign companies to be part of these projects.”

Mercosur free trade bloc

In the midst of trade negotiations with the U.S., Canada concluded exploratory talks with Mercosur, a free trade block involving Argentina, Brazil, Paraguay and Uruguay.

In its bid to diversify trade away from dependence on the U.S., access to 260 million consumers in Mercosur would help Canada, said Daudelin. Canada and the bloc are set to exchange offers about a free trade deal in 2019, he said, adding: “I don’t see Bolsonaro opposing it.”


Bombardier, the Montreal-based aerospace company, has been battling Brazil’s Embraer SA for years for dominance in the mid-sized jet market. Brazil has a launched a complaint at the World Trade Organization, arguing that Canada has unfairly subsidized Bombardier. As the case is before the WTO (and U.S.-based Boeing bought a big stake in Embraer in July), a Bolsonaro government is unlikely to significantly impact the dispute, analysts said, despite his nationalist rhetoric.

“We expect a Bolsonaro government will continue with the sale of Embraer to Boeing,” said Prusa. “I doubt we will see any real improvement on the dispute side of things between Brazil and Canada.”

Mining and agriculture 

Brazil is home to the Amazon, the world’s largest rainforest, which scientists describe as the “lungs of the planet” for its role in sucking climate-changing carbon dioxide out of the atmosphere.

Bolsonaro has pledged to open more of the Amazon to farming, mining and hydroelectric dams. He won significant backing from rural lawmakers who say Brazil’s rules on deforestation and land management are too onerous for business. His proposals to increase extraction have been lambasted by environmentalists and Indigenous groups who accuse him of putting the planet in peril.

Brazil is the world’s largest exporter of soybeans, according to Bloomberg, and a powerhouse producer of other agricultural commodities. Bolsonaro’s pledge to open new land to agriculture will mean more competition for Canadian farmers on global markets. 

“Brazil is in the unique position of having a lot of land left that could be turned into farmland,” Prusa said. “We expect production to increase in Brazil.” 

Daudelin, however, said Canadian farmers shouldn’t be too worried. Brazil produces more than 10 times as much soy as Canada, he said, yet ,”Canadian exporters are competitive.” Trade tensions between the U.S. and China, and broader U.S. farm policy, will have more impact on global farm prices than Brazil boosting production, he added. 

An Indigenous man sits next to a fence outside National Congress, lined by security forces, during the Indigenous Peoples Ritual March in Brasilia on April 27, 2017. Indigenous leaders say they expect repression to increase under Bolsonaro. (Eraldo Peres/Associated Press)

Bolsonaro has hinted at plans to expel international non-governmental organizations from Brazil, specifically mentioning the World Wildlife Fund, a group with operations in Canada.

He initially proposed withdrawing Brazil from the Paris agreement to combat climate change, which would be an especially heavy blow to the deal given the importance of Brazil’s forests for regulating global temperatures, although he changed his tune later in the campaign.

For mining and resource firms, Bolsonaro has pledged to make it easier for major extraction projects to be approved.

Toronto-based Belo Sun Mining Corp., for example, has been embroiled in a long-running licensing fight over a major gold mining project in the Amazon, after Brazilian regulators said the company hadn’t properly consulted with local Indigenous communities.

This is the kind of dispute where Bolsonaro has said he favours economic growth over environmental protection.

With nearly 60 per cent of the world’s public mining companies listed on the Toronto Stock Exchange, losses for the Amazon rainforest under Bolsonaro could spell big gains for Canadian investors.

With files from Reuters


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Real Estate

5 ways to reduce your mortgage amortization





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





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





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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