How to save for a down payment?

Buying your first or fifth house is both exciting and stressful. For many of us, this is a great achievement. Being the most prepared possible is probably the most important step in buying a home, including saving for the down payment. The majority of Canadians think they need to save thousands of dollars before they can even look for a home. Although a large down payment is advantageous, saving for this payment may be easier than you think. There are several steps that must be taken to ensure that you save money effectively.

Have a goal

Image result for have a goal Your primary goal is definitely buying the house, but unfortunately this goal is not specific enough. Rather, set yourself smaller but precise goals. So, to your surprise, you’ll manage to pick up the money for the first installment faster than you thought.

What should these small goals be? Technically, these goals will be what you want them to be. But if you’re looking for inspiration, here’s a list:

  • Automatically transfer a portion of your monthly income to a savings account
  • Spend months on meals in restaurants and eat more often at home
  • Give yourself a savings goal higher than previously established. You will be delighted once you reach it.

Whatever goals you set, make sure you can reach them but at the same time get out of your comfort zone. So, you will be able to buy the house of your dream in a reasonable amount of time.

Plan a budget

 <b>Plan a budget</b>

After setting your goals, set a budget. We all know that budgets are restrictive. But that’s the only way to reach the end goal of buying a house.

First, you must calculate your monthly expenses. These should be the essential things:

  • Rent
  • Public services
  • Grocery
  • Auto / Gas / Transportation
  • Paying debts
  • Contribution to a TFSA or RRSP

Once you calculate how much money you need per month to live, deduct that amount from your total income and you will get the money you have left. It is suggested that you deposit the majority of this amount into your savings account.

You can also plan to rent with option to buy

Follow the budget

Once the budget is set, the most difficult part is to respect it. Let’s be honest, respecting a budget is not easy. It takes a lot of effort and dedication, but you must always keep in mind the ultimate goal of all this, the house. Focus instead on the pleasure you will have once you own a home.

Save smartly

 <b>Save smartly</b>

In addition to respecting your budget and saving, you must save in an intelligent way. That means you have to be prepared for the unpredictable. Life goes on and your goal can be slowed down if you are not well prepared. You need an emergency fund . While saving for the down payment, try to save some money for emergencies and contingencies.

Increase your monthly income

 <b>Increase your monthly income</b>

If you absolutely want to buy a house, you can also consider increasing your monthly income, which will help you save more and more quickly. Find a second job on weekends. Sell ​​items you no longer use. Or turn your passion into a job. Just make sure these extra efforts bring you extra income.

Buying a home is an important decision in everyone’s life and saving for it will not be easy. But if you make a plan and follow it to the letter, the down payment will be accumulated faster than expected.

Loans and programs to help you out of debt | Loans Quebec

Image result for loans to help you get out of debtIn Canada, there are different types of debt that consumers may have; some good and some bad. Unfortunately, debt problems are problems that many of us will face one day, in our lifetime. Whether using our credit cards, buying cars or getting mortgages. As mentioned above, not all debts are bad. A bit of household or consumer debt can actually be a positive thing for your credit history, your credit report or your credit rating, if this is handled correctly of course. On the other hand, problems of indebtedness can occur. Situations simply beyond our control. Even trying to pay for basic necessities can be a problem when financial emergencies fall on us. So, for all borrowers currently struggling to settle their debts, do not panic, there are always solutions. They are not all practical or easy, but if you work hard and stay motivated, you’ll get away with it.

In the article below, we will discuss some of the most common types of debt in Canada and around the world. We will also discuss some of the solutions available to you. Once you have read this, you will be able to think of the solution that will suit you the most.

Unsecured debt

Unsecured debt

This type of debt is called “unsecured” because it does not require any property that can be used as collateral in the event of default by the borrower. In fact, unsecured debt is also commonly referred to as “consumer debt” because it involves the consumption of goods and services, which, in general, are not going to gain in value, as a home would. The most common types of unsecured debt include, but are not limited to:

Unsecured credit cards

This is one of the most common types of debt. In fact, it will probably be one of the first types of debt that Canadians will have. Although the legal age for signing up for a credit card is 18, it is not uncommon for parents to give pre-paid credit cards to their children, or simply to introduce the idea of ​​credit. . Many borrowers even have multiple credit cards, each of which offers a different range of benefits. Some are free, others have annual fees, give reward points, or offer small increases in money at the end of the year.

It’s pretty rare nowadays for someone to have only one credit card and it’s not necessarily a bad thing. In fact, the responsible management of a credit card is one of the first steps that a consumer can take to a good credit score. As long as you pay your monthly balance on time and in full, you should start developing a credit rating and a healthy credit history.

Again, credit card debt can certainly get out of control when a consumer enters a revolving debt cycle. After all, it can certainly be tempting to simply make the minimum monthly payments, instead of paying off the balance in full.

Line of credit

Image result for lines of creditA line of credit is a temporary loan of a predetermined amount, most often given to borrowers with good credit, by banks and other financial institutions. Most banks can offer their customers lines of credit of approximately $ 50,000. In this case, the borrower can tap into the bottom as needed, pay only interest on the money he withdraws, and make minimum monthly payments affordable. Lines of credit are frequently used for financial emergencies or to finance a major purchase when the balance of a borrower’s bank account can not support it, such as home renovations or the repayment of high-interest debt. However, it is good to know that lines of credit can be secured and unsecured. Generally, an unsecured line of credit will have a higher interest rate because it does not involve collateral, as would a secured line of credit.

 

Personal and commercial loans

Personal and commercial loans

 

Just like a line of credit, a personal or business loan can be requested to fund everything a borrower might need. This expense can be for a vacation, a car or a house that requires attention, or in the case of a commercial loan, to finance the company of the borrower. Where the personal or commercial loan differs from a line of credit is that the borrower will receive a sum of money that will be repaid in monthly installments. The higher the credit rating of the borrower, the higher the interest rate will be.

Debt guarantee

Debt guarantee

 

This type of debt is called a “guarantee” because a borrower must offer something as collateral to secure the loan or credit proceeds he or she requests. Guaranteed debt is more often needed to finance larger, more expensive purchases that the borrower can not afford. The guarantee involved can range from a small security deposit to the home of the borrower. In short, all that the lender can legally seize to recover the money that is due to him in case the borrower would be in default of payment on his loan. However, a secured debt can not be included in a bankruptcy claim or a consumer proposal. Some common types of secured credit include, but are not limited to:

mortgages

A mortgage is one of the most common examples of secured credit. Here, the potential landlord applies for a mortgage in order to finance a house that he is looking to buy. Like any type of loan, the borrower will repay his home in monthly installments, including interest, the rate of which must be discussed with the lender. The most important thing to know here is that since the mortgage is guaranteed, the house is the asset that will be used as collateral. In other words, if a borrower is in default, his lender could be forced to take over the house and sell it to recover his loss. This is a “seizure”.

Guaranteed auto loans

Auto loans can be unsecured, but secured loans are more common. According to the same principle as a mortgage, a borrower can obtain a loan through his chosen lender, with whom he will finance a car purchased and paid in monthly payments. And if he can not make his payments, the car will be seized.

Guaranteed credit cards

A secured credit card is an option that borrowers with bad credit or no credit history can use for their consumer needs. Unlike an unsecured credit card, this type of card, of course, will require a deposit before you can start using it. The user will have a predetermined credit limit on the card (often equal to the security deposit, but not always) and will be able to use it, then pay bills as needed, all with a lower interest rate than an unsecured card. Once the borrower decides to close his secured credit card, if the debt is fully paid, the security deposit will be refunded. When a borrower uses a secured credit card responsibly for long enough, their credit rating will increase and they can then apply for an unsecured credit card, if they wish.

How to manage your debt

How to manage your debt

 

If you have difficulty managing your debt, whether secured or not, from a credit card or mortgage, sit back, relax and know there are ways to settle the problem. In fact, debt problems have become a relatively common occurrence across Canada. While it’s true that not all debts are bad, too much debt can become overwhelming, and it can be difficult to find a solution. Especially when all you have in mind is the amount of money you owe. As mentioned above, all of these options are not simple or practical, but they are probably going to be better than being stuck for the rest of your life.

Debt consolidation loan

 

One of the first things you can try to do is apply for a debt consolidation loan from your bank or credit union. When it comes to this type of loan, borrowers with a higher credit rating will have an easier time getting a loan. Your lender will likely require some type of collateral, such as for secured debt. The more assets you have, the higher the loan will be. If you do not have collateral, your chances of approval will depend on other factors, such as your credit history and ability to repay a loan. However, if you manage to get a debt consolidation loan, you will know exactly when all your debts will be paid in full and you will also have a lower and more manageable interest rate.

Debt Management Program

 

Signing up for a debt management program means that you will be hiring a credit counselor and will work together to help you eliminate your debt once and for all. The credit counselor should be able to contact all your lenders and creditors and negotiate the terms of payments on your behalf. Your debts will then be consolidated into a single debt, which you will pay through your advisor in one fixed monthly amount. The only problem with such a program is that it is not a binding contract; some of your lenders may not accept it. However, if this is a possibility, enrolling in a debt management program will probably be less difficult and less burdensome than the following 2 options.

Consumer proposal

 

The main difference between a consumer proposal and a debt management program is the binding force of these. For the proposal to be accepted, more than half of your lenders must agree to participate. Once the proposal has begun, all debts included therein will be frozen, and you will be reimbursed through a trustee for up to five years. Meanwhile, your creditors will be forced to stop their actions against you and you will only need to deal with your insolvent trustee.

Bankruptcy

Image result for bankruptcyBankruptcy should be reserved for the most severe cases of indebtedness, because even if it could help you out, your credit will be damaged for 7 years. There are a number of situations that cause bankruptcy, and if you consider that among your options, you must make sure that you have no other choice. Like the consumer proposal, by declaring bankruptcy, you will work with an insolvency trustee who will help you file the bankruptcy claim. All your creditors will be contacted, any action against you (payroll, lawsuit, etc.) will stop and your debts will be frozen. A bankruptcy notice will then appear in your credit report for a minimum of 7 years, and you will need to rebuild your credit from scratch.