Notoriously technical and difficult to calculate, figuring out your mortgage interest rate can be confusing, so we’ve compiled a short guide to help you if you’re thinking of buying a property in Canada:

Fixed rate or variable rate mortgage

A fixed rate mortgage is a popular option because homeowners can make the same interest payment each month; protecting them from rate increases. Be aware though, that these mortgages are compounded semi-annually, meaning that if you’re quoted a rate of 6%, it could actually be 6.9% because the numbers are compounded using a mortgage rate less than 6%. Typically, the more a mortgage is compounded, the higher the monthly interest payments will be.

These mortgages also often come with harsh penalties when the term is broken.

For more flexibility, you might want to choose a variable rate mortgage, which fluctuates with the market, and while you’ll still be making the same payment every month, the amount going to interest and that going to your principal, will go up and down.

How can you calculate your mortgage interest yourself?

The following equation can help you figure out your rate of interest, you’ll just need your payment amount and PV factor (the number of months in your mortgage term or your total number of payments):

Determine your principal: PV factor x payment amount

Determine your total payment amount: divide your principal with the total number of payments you’ll be required to make.

You should be left with your total payment amount.

Note that calculations obtained using this equation obviously don’t factor in any other payments, such as insurance premiums and property taxes.

How will you be affected if your interest rate goes up?

Provided you know your current mortgage rate, mortgage payment, amortization period (PV factor) and frequency of payments, you should be able to figure out your payment amount after a rate increase, by using an online mortgage calculator.

Below are definitions of the above terms to help you navigate the calculation process:

• Current Mortgage Rate: This is the existing interest rate you’re paying onyour mortgage loan.
• Current Mortgage Payment: The monthly mortgage payment you make.
• Amortization Period: The number of months (i.e., total amount of payments) there are in your mortgage term.
• Payment Frequency: How often you are making payments towards your mortgage (usually monthly).

Even if you have a mortgage with a variable rate, you can put the figures into a mortgage calculator while accounting for the fluctuating rate of interest.

Working with a financial advisor or mortgage broker can help you make better sense of your mortgage rate and how it’s calculated, and armed with the above information, you can prepare yourself for buying your first Canadian home.

Being thrifty is a good thing. If you are frugal, you will almost certainly never run into financial difficulties. Being frugal, on the other hand, entails giving up a lot of creature comforts in the hopes of expanding your financial account. Regrettably, that is not the way to conduct your life. Some people become so engrossed in the habit of being frugal with their money that they find it difficult to let go and enjoy it. However, there are a lot of things worth spending money on. Let’s take a look at some of them:

• Eyes– Perhaps our most crucial sense is vision. As a result, investing in the most comfortable contacts or glasses is a must. If you use spectacles, choose the thinnest lenses possible with anti-reflection and scratch-resistant coatings. Purchase contacts with the most up-to-date breathable technology for daily use. Stop reusing your disposable contacts after the expiration date. Make an investment in a pair of UV-protective sunglasses.
• High-quality Mattress – A third of your life is spent sleeping. It’s only natural to want the comfiest and supportive mattress you can buy. Make sure you’re at the top of your game every day so you’re completely rested and ready to take on the challenges ahead. Just keep in mind that mattresses have exorbitant markups, which is why there have been so many mattress companies throughout the years.
• Clothing– When it comes to shopping for clothes, stay away from the discount stores and invest in some high-quality items. Sure, that off-the-rack suit appears to be inexpensive, but it makes you look like you’re clothed in a shabby suit. You might be surprised to realize how much your co-workers and employer put into looking their best.
• Delicious food– What you eat determines who you are. Eating a healthy diet boosts your metabolism and strengthens your immune system. As a result, you’ll be less likely to get sick and keep healthy body weight. As a result, if you eat a healthy diet, you should expect to prevent diet-related disorders like diabetes and arteriosclerosis.

A frugal person’s worst nightmare is to spend money on any of the items on this list. However, there are moments when you must learn to relax and enjoy yourself. While we all want to retire early, the majority of us don’t want to do so in bad physical and mental conditions. You improve your situation by spending your money on things that are important to you.

The year 2020-21 was a whirlwind, with stock markets soaring more than 80% from their lows in March 2020 through the close of FY21. Despite the epidemic, given the challenges at the bottom of the pyramid, for some, the rising trend in momentum has come as a relief, while for others, it has come as a surprise. Markets, on the other hand, made money for everyone who invested before the epidemic. Fundamentally powerful, volatile, and cyclic – all of these themes have played out in the previous year, but investors should search for equities that are more adaptive and can withstand difficult times if things start to get worse.

A diversified portfolio of high-quality equities can help absorb short-term losses while providing solid risk-adjusted returns. Compounding may also be beneficial if equities are kept for a longer period of time. Patience is the key to being a successful investor. Unless you’re in desperate need of cash, you should let your gains ride. “When we own part of good enterprises with exceptional managements, our favourite holding time is forever,” Warren Buffett correctly states.

Stocks with efficient leverage, greater operational and free cash flows, a good cash conversion cycle, and a great track record of ROEs and ROCEs or stock trend analysis should be prioritised. The equities mentioned below have the ability to weather the storm and come out on top of the other side of the pandemic. With a lengthy runway ahead of them, these three names, if acquired in a basket and held for the long term, may produce good returns for an investor:

• Larsen & Toubro

L&T has benefited greatly from the many infrastructure plans made in the recent Budget, and the business has demonstrated not just excellent execution but also financial strength and wealth creation throughout the years. Over the previous ten years, the firm has routinely generated ROEs above 14 per cent, with operating margins of over 15 per cent. Despite this, it continues to trade at enticing prices, with a PE of less than 15x, making it a compelling value-buy.

• Dr Reddy’s 

With the surge of Covid-19 instances and the need for medical assistance, demand for pharmaceuticals has surged, boosting sales of companies like Dr Reddy’s, which has delivered constant net profit growth at a CAGR of 14 per cent over the previous ten years. Pharma companies have been underperformers for several years, but with a lot of tailwinds on their side right now, things appear to be looking up, particularly for this firm.

• Kotak Mahindra Bank 

During the epidemic, the government made efficient measures to guarantee that companies had access to loans. In reality, in order to provide relief to debtors, the RBI cut interest rates and declared moratoriums. While this was a great start, many institutions were wary and took adequate arrangements to protect their assets. One such bank, Kotak Mahindra Bank, obtained capital at the outset of the epidemic and has been particularly careful in its lending. It has routinely delivered a 20 percent+ CAGR increase in earnings over the last ten years while maintaining the quality of its book.

A portfolio of fundamentally good equities or stocks that show growth on stock trend analysis might help you build long-term wealth. “Usually a lengthy list of securities is not a sign of the intelligent investor, but of one who is uncertain of oneself,” says Philip Fisher. Investors should stay invested and secure in this epidemic if they follow this attitude.