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Borrowing money to buy mutual funds or segregated funds (Leveraging)
Regulatory authorities require notice to investors who consider borrowing money to buy mutual funds or segregated funds, to make investors aware of the
risks involved in borrowing to invest.
Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to
purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities
purchased declines When you purchase segregated funds, the value of the policy is determined with reference to units of segregated investment funds. If you
use cash to pay for your purchase in full, your percentage gain or loss will equal the percentage increase or decrease in the value of your mutual funds or
segregated funds. The purchase of mutual funds or segregated funds using borrowed money magnifies the gain or loss on your cash invested. This effect is
called leveraging. For example: If $100,000 of mutual funds or segregated funds are purchased and paid for with $25,000 from available cash (your money)
and $75,000 from borrowings, and the value of your mutual funds or segregated funds declines by 10% to $90,000, your equity interest (the difference
between the value of your mutual funds or segregated funds and the amount borrowed) has declined by 40%, i.e., from $25,000 to $15,000.
As it is apparent that leveraging magnifies gains or losses, it is important that you know that a leveraged purchase of mutual funds or segregated funds
involves greater risk than a purchase using your own cash resources only. To what extent a leveraged purchase involves undue risk is a determination
to be made on an individual basis by each purchaser, and will vary depending on the circumstances of the purchaser and the mutual funds or segregated
Money is, of course, also required to pay interest on the Loan. Under these circumstances, investors who leverage their investment are advised to have
adequate financial resources available both to pay interest and also to reduce the Loan if the borrowing arrangements require such a payment. No matter
what the value of your mutual funds or segregated funds is, you will, in all circumstances, remain liable to reimburse all amounts due on your Loan.
It is important that you understand the risks and rewards of borrowing (leverage) as outlined above, and that you undertake this investment program with that
11. Terms and Conditions
The following terms and conditions will apply to the Loan and form an integral part of this Agreement.
Where used in the Agreement,
1.1 “Agreement” means the Application and the Terms and Conditions.
1.2 “Application” means sections 1 to 9 of the Agreement.
1.3 “Bank” means B2B Bank.
1.4 “Borrower” shall mean the Borrower and/or the Co-Borrower as the context may require and “I” shall mean I and/or we as the context may require.
1.5 “Dealer” is the Dealer identified in the Application.
1.6 “Demand Note” means the demand note identified in section 7 of the Application.
1.7 “ Designated Advisor” is the dealer or representative whose name appears in section 1 of the Application or as I may direct from time to time to the
Bank in writing. I acknowledge that the Designated Advisor is my agent and not the Bank’s.
1.8 “Indebtedness” is defined as any and all amounts outstanding pursuant to this Agreement.
1.9 “Loan” means the loan between the Bank, as lender, and the Borrower, as borrower, as more fully described in the Application
1.10 “Loan Documents” are any pre-printed documents which include this Agreement or the Letter of Direction (if paying out another financial institution).
1.11 “TFSA” means Tax-Free Savings Account as dened in the Income Tax Act (Canada).
2. LOAN TERMS
The Loan terms are as set out in sections 6, 7 and 8 of the Application which is an integral part of this Agreement.
I acknowledge that the Bank may review the Loan annually or as frequently as it shall determine and I agree to provide any additional information that it
4. JOINT AND SEVERAL LIABILITY
If more than one person is bound by this Agreement, we shall be jointly and severally liable (in Quebec: solidarily liable) for the total Indebtedness and for
the fulfilment of each of the obligations contained herein and in the other Loan Documents.
I agree to pay all costs, fees and expenses, including, without limitation, legal fees and disbursements, which the Bank may incur in protecting its position
and/or any policy or in collecting the Indebtedness. I acknowledge and agree that if any cheques or pre-authorized debits issued by me are returned to the
Bank unpaid, the Bank will charge a fee for each cheque or pre-authorized debit so returned (currently $50.00 or any amount published from time to time).
All such costs and fees will be paid by me forthwith upon notification. Until paid, they shall be added to and form part of the Indebtedness and shall bear
interest at the rates applicable from time to time pursuant to the Demand Note therein.
6. PERSONAL INFORMATION
The Bank collects personal information including certain credit, employment, and other financially-related information (“Personal Information”) from its
clients, and if necessary, from their surety (guarantor) and other sources, as described below. The Bank makes use of this personal information in the
context of activities it generally carries out, including but without limiting the generality of the foregoing: verifying the identity of its clients, opening an
account or a loan, understanding the overall financial situation of a client and adequately delivering products and services.
To this end,
6.1 I authorize the Bank, its affiliates and service providers acting on its behalf to:
i) obtain information regarding my solvency or financial situation, as may be required from time to time for the purposes provided herein including
the applicant and co-applicant’s identification and until full payment of any amount as may be owing to the Bank, from legally authorized persons
as well as from any Designated Advisor, personal information agent, any person referred to in credit reports obtained, any financial institution,
any mortgage insurer or any other person providing references, from my current or previous employer mentioned in the application, and I
authorize such persons to disclose the information requested;
ii) disclose the information it holds on myself to any person authorized by law, Designated Advisor, personal information agent, financial institution,
mortgage insurer or any organization duly designated by the Bank according to paragraph 6.3 below, or with my consent, to any person who so
iii) use my social insurance number for income tax reporting, identification and data-grouping purposes regarding services offered by the Bank;
iv) make my personal information available to its employees, affiliates and services providers who are bound to protect the confidentiality of
In granting this authorization, I acknowledge that I am giving the Bank permission to request and access my credit report from credit-reporting agencies.
6.2 You may at all times, without notifying me, assign my account to any person. The assignee may be required by applicable laws to retain my personal
information for a certain period of time.
6.3 With a view to benefiting from high-quality service and obtaining all information available regarding the financial products offered by the Bank, its
affiliates or any enterprise that has been duly designated by the Bank, I authorize the Bank, its affiliates and any enterprise duly designated by the
Bank to make use of the information it holds in my regard in order to communicate any background documentation, advertisement or information to
me. I understand that the employees and authorized representatives of the Bank and its affiliates will use my personal information only to the extent
that such personal information is necessary or useful for the performance of their duties. I am entitled to request that the Bank refrain from using
the information for the purposes set out in this paragraph at any time by providing written notice to the Bank. The Bank will not refuse to provide
the services described herein, in the event that I am entitled to them, even if I have revoked my authorization regarding the use of this personal
6.4 In the case of services rendered by the Bank from a foreign country, I understand that the Bank may be required to disclose my personal information
to regulatory authorities in the foreign jurisdiction, as per applicable laws;