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GM announces Oshawa assembly plant will close in 2019

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Thousands of General Motors assembly plant workers in Oshawa, Ont., halted production this morning before hearing the devastating news that the automaker plans to close the facility in 2019.

It’s not clear how many of the 2,500 employees will lose their jobs as part of a global restructuring move to lower carbon emissions and prepare for a future of electric and autonomous vehicles, but GM confirmed the closure Monday of the plant, which is about 60 kilometres east of Toronto, and said it is exploring options to retool the facility.  

Unifor, the union representing autoworkers in Oshawa, said late Sunday it has not heard “complete details of the overall announcement,” but was told no vehicles are set to be assembled at the facility past December 2019.

“Based on commitments made during 2016 contract negotiations, Unifor does not accept this announcement and is immediately calling on GM to live up to the spirit of that agreement,” the statement read, noting that contract negotiations were slated for 2020. 

The union will hold talks with GM on Monday afternoon. Premier Doug Ford is also expected to comment on the situation when he’s at Queen’s Park before noon.

The Detroit-based automaker had been quiet on the expected move since news broke Sunday evening.

But GM chairman and CEO Mary Barra revealed during a morning news conference in Detroit that it would be terminating production at the Oshawa facility, along with two other complexes in Detroit and Warren, Ohio. 

“This industry is changing very rapidly and we want to make sure we’re well positioned,” Barra told reporters, noting the automaker will be focusing on its future through investment in autonomous and electric vehicles. 

GM has yet to set a timetable for the production halt at the Oshawa plant, but confirmed it will take place sometime in 2019.

Workers inside the plant stopped production shortly before 9 a.m. ET. 

Zachary Way, a new hire at the plant, was among those who walked off the production line in protest and is now anxiously awaiting a 2 p.m. meeting with the union.

Way told CBC News that the company has told him “basically nothing” at this point, although he’s already fearing the worst. If he is laid off, “it’ll be bad,” he said.

Way’s father and brother also work at the Oshawa plant, which he likened to the heart of the city. If it shuts down, Way said, he’s not sure how Oshawa will recover. He likened an empty plant to an “open wound.”

Oshawa assembly plant

The Oshawa plant, where GM Canada has its headquarters, produces the Chevrolet Impala and the Cadillac XTS cars, the majority of which are shipped south of the border, along with the Chevrolet Silverado and GMC Sierra pickup trucks. 

The complex is one of three GM manufacturing facilities in Ontario, along with St. Catharines and Ingersoll. 

GM produces two cars, the Chevrolet Impala and the Cadillac XTS, at the Oshawa plant. (General Motors Canada)

The plant was headed for closure in June this year amid a slump in sales of passenger cars in North America, and specifically the U.S., for the two cars built in Oshawa.

In late 2017, GM Canada reported a 17.2 per cent year-over-year drop in vehicle sales, while Canadian year-to-year sales were up 13.6 per cent thanks to strong numbers earlier that year. 

Around the same time, the auto manufacturer restarted a truck assembly line and scaled back car production to address shifting American buyer preferences.

Last month, GM ramped up its cost-cutting efforts by offering buyouts to thousands of white-collar workers with 12 or more years of service in both Canada and the United States. 

The company has said it needs to be smaller to prepare for possible tougher times.

‘It’s going to affect the province’

The assembly plant has formed the backbone of Oshawa’s economy for more than 100 years. GM bought the plant in 1953 from McLaughlin Buicks, making it one of the biggest in the world. 

Initially, Oshawa Mayor John Henry had hoped news of the closure was “just a rumour,” but several hours after it made national headlines, he predicted “there’s more to this than what we know.”

“People are waiting for information. They want to know what their future is like,” he said. 

“They deserve to know the answers and what is going on.”

Henry, who worked at the facility as a teen, claims a sombre mood is now blanketing the city because the economic ripple effect will send shockwaves beyond its workers and their families. 

“This isn’t just about building cars,” he told CBC News on Monday, noting he had not yet spoken to anyone from GM.

“It’s going to affect the province, it’s going to affect the region.”

It’s going to change the spending habits in this community.– Oshawa Mayor John Henry

Dozens of auto-parts businesses, as well as the companies that supply them, will also be affected. A wide array of local businesses, such as restaurants and retailers in Oshawa, could also feel the effects of the shutdown.

GM workers have been good for Oshawa, Henry noted, raising millions of dollars for charity like the local United Way, even during hard economic times.

“It’s going to change the spending habits in this community,” he said.

“And we thought with the recent investments that General Motors had made, that this plant was going to continue to produce vehicles for a long period of time.” 

The Oshawa assembly plant, where GM Canada has its headquarters, produces the Chevrolet Impala and the Cadillac XTS cars, along with the Chevrolet Silverado and GMC Sierra pickup trucks. (Tijana Martin/Canadian Press)

Chris Buckley, president of the Ontario Federation of Labour, said the move is “absolutely shameful” and that GM should treat its workers better.  

“General Motors should be disgusted on how they’re rewarding these members,” Buckley told CBC News. 

For every job at the assembly plant, he explains, an additional nine jobs are created in the community. 

“This is going to be absolutely devastating,” he said about the expected closure.

Oshawa NDP MPP Jennifer French also decried the looming closure, calling it a “callous decision that must be fought.”

“GM did not build Oshawa. Oshawa built GM,” French said in a statement on Sunday, noting the proposed layoffs would greatly impact workers and their families. 

“Words cannot fully describe the anxiety that my community is feeling at this moment.”

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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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