|  Wages are up. That’s a good thing, right? Signs that wages are finally ticking up could be a welcome relief for many Canadians struggling under the weight of rampant inflation. But for economists looking ahead to next week’s Bank of Canada interest rate decision, there are some downsides to growing incomes. For one, while higher wages are important for Canadians keeping pace with the cost of living, bigger payrolls can have knock-on effects that further fuel inflation. Businesses are indeed planning to raise prices in the year ahead to offset the need to hike wages, according to recent surveys by the Bank of Canada and the Canadian Federation of Independent Business (CFIB). While today’s inflationary pressure largely comes from factors oversees, Brendon Bernard, senior economist with Indeed, tells Global News the Bank of Canada will be weighing wage growth carefully as it looks to hike interest rates next week. "It might be the case that wage growth isn't the primary source of factors driving inflation today, but it could have increased importance tomorrow," he says. Read more from Global News reporter Craig Lord.  Stranded at the gate? Here’s what you’re owed Chaos at Canadian airports has travellers scrambling over flights that have been cancelled or delayed, in addition to baggage that’s been damaged or gone missing. Air Canada’s recent decision to cut 15 per cent of its summer schedule only compounded labour shortages at airports and complicated summer vacation plans for thousands. Global News spoke to air passenger rights advocate Gabor Lukacs this week, who said his team has been overwhelmed by complaints as of late. Keeping track of what you’re owed for a flight that’s cancelled or delayed, as well as the narrow timeframes you have to file complaints for lost baggage, can indeed be a lot to process. Global News broke down what you need to know about what you’re owed for travel disruptions.  Are variable mortgages still the cheapest? The second half of 2021 saw variable rate mortgages surge in popularity to become the preference for a majority of Canadian home buyers and mortgage renewers. That’s according to the latest industry report from the Canada Mortgage and Housing Corp. (CMHC) But are variable rates, which immediately become costlier when the Bank of Canada raises interest rates, still the more affordable option? Or are Canadians better off locking in the traditional five-year fixed-rate mortgage as interest rates rise? Mortgage experts who spoke to Global News this week said there might still be a compelling case to go variable — if you can stomach the interest rate roller coaster. Find out more in this online post by Craig Lord. ________________________ – THE QUESTION – “I'm coming to the end of my mortgage on my principal residence. I used approx. $150K for a down payment on a rental property. This was secured against my house and is still being paid. The rental unit has now doubled in price and the principal and down payment can easily be paid off from the value of the apartment. The rental payments easily cover all annual outgoings. I'm now thinking of buying a vacation investment property in Europe. What would you advise? Can the original rental property down payment from my principal residence be secured on the rental property? If so, would you advise taking equity out of my principal and buy? Or would you advise a secured line of credit? The European Commission investment is likely to be between $70K and $115K.” — A Money123 reader “Great question… My initial reaction would be to tell you to think long and hard about purchasing property in a different country for two important reasons: 1. Who is going to look after your property when you're not there, and 2. How do you go about navigating the rules, regulations, and tax implications of having real assets in a different country? A simpler solution may be to book time at this vacation spot instead of owning it. If you're still keen on purchasing in Europe, then taking the money out of either your home or rental could work… and yes, the original down payment can be secured on the rental property. However, there may not be a need to move it because the interest on that down payment taken from your principal residence is tax deductible against your rental revenue anyway. Generally, when you borrow for investments, and if those investments are not in registered accounts such as RSPs or TFSAs, the interest on the borrowed money is tax deductible, no matter where that money came from. There are two ways of taking money out of your home: using a mortgage or using a secured line of credit, also known as a home equity line of credit (HELOC). Both mortgages and HELOCs are technically mortgages in a sense that both require a notary or a lawyer to register a charge on the title of your home. The main difference between a mortgage and a HELOC is that the mortgage has an amortization (part of your payment goes towards paying off your mortgage so that your principal balance decreases with each payment) whereas the HELOC is interest only and it does not decrease unless extra payments are made. Since your rental property has doubled in value, it's safe to say you have enough equity to repay the $150,000 taken from your home, and/or to pay for your investment. If you repaid the $150,000 and then used your principal residence to then purchase the European Commission investment, it could cost you twice at the lawyers; every time you refinance or change a mortgage, a lawyer must reregister the mortgage amount on title (unless you have a readvanceable mortgage… something for another time). I would pick the easiest and least expensive option: I would refinance the rental property by getting a mortgage or adding a secured line of credit. Specifically, I would choose an amortizing mortgage on the rental so that we can keep chipping away at that debt. Further, only one lawyer fee is paid because only one transaction is required.“ -Eitan Pinsky, mortgage expert, owner, Pinsky Mortgages ___________________________ Want your money question answered by an expert? Get in touch! | 
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