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Making a Budget

Make a budget and find out the best ways to manage your mortgage money better

We recently took a look at the expenses beyond securing a low mortgage rate, the purchase price that you should anticipate to pay, and the expenses related to moving in. Now it is time to have a look at your ongoing month-to-month expenses, ways to pay off your Canadian mortgage faster, and the renewal process. This handy checklist will help keep you organized.

Budgeting for Home Expenses

Budgeting for home expenses calls for organization and some degree of restraint. Also, you will want to have funds reserved for unanticipated maintenance expenses.

Monthly expenses includes things like:

Property taxesCanadian dollars in a piggy bank studio cutout
Maintenance and upkeep
Insurance
Mortgage payments
Heating and cooling
Hydro
Condo fees (if applicable)
Internet
Water
Cable
Telephone
Appliance rental (if applicable)

Budget Your Monthly Expenses

Beyond the expense of your monthly best mortgage rate, it  is essential that you are aware of exactly what you are spending and where you are able to cut expenses. Budgeting can be time consuming and tedious! Making use of an online budgeting tool like Mint.com will help you save money and time as it automatically tracks your expenses and allocates them against your budget.

How Can I Save Money?


High Interest Savings Account
Make your savings work harder for you.

Save Money on Credit Cards
Altering your credit card can help save you money by providing you with a lower interest rate.

Paying off Your Mortgage Faster            
Having your very own house is both thrilling and gratifying. Spend some time putting together a strategy to pay it off as quickly as possible. There’s no freedom like financial freedom.

 

How to Prepare For Mortgage Rate Increases

Can your budget handle a rate increase?

There is a bunch of talk about Canadian mortgage rate increases. The single biggest investment most Canadians make is their home; this represents almost 40% of the average family’s total assets. The big problem at the moment is that many Canadians are living in homes they won’t be able to afford once interest rates start to rise. Right now The Bank of Canada’s overnight rate is 1% – this prime rate went above 20% in 1981! What would happen to your home and mortgage if rates were to go up tomorrow?

Tip # 1: Pay Down Your Principal

If rates are increasing, the best plan is to lower your principle. The two most common ways to tackle this is by:

Switching from Monthly to Rapid Bi-Weekly

Switching from monthly mortgage payments to bi-weekly payments could help you save thousands of dollars in interest.

Making Lump Sum Prepayments

Try making lump sum prepayments or doubling up your payments whenever possible. This will help you tackle your debt quickly and efficiently.

Tip # 2: Plan for it Now

Open a savings account that you are able to pull from to pay for increases in your mortgage interest rate and payments down the road.

Tip # 3: Get Some Professional Advice

Speak with a mortgage professional about your options. You may be able to refinance now and lock in a low mortgage rate.

Tip # 4: Get Real About Your Debt

If you need to, downsize your home or consolidate your loans to protect yourself from rising interest rates. Most importantly, if you are shopping for a new home, calculate your affordability at a much higher interest rate – it’s the only way you can determine your chances of affording your home for the long term.

 

How to Negotiate Your Mortgage Rate

It’s time to start bargaining!

It goes without saying that you would like to secure the lowest possible mortgage rate. With that being said, negotiating your best mortgage rate will entail some homework. This way, you’ll be able to work out a fair request. Here are a few tips on how to negotiate the best Canadian mortgage rate.

1. Be Honest

Your mortgage agent will ask you a number of questions to see what best suit your needs. Tell the truth.

2. Ask Questions

If you’re confused about something, don’t hesitate to ask. Only a small group of people actually understand the ins and outs of mortgages, so don’t be shy!

3. Pay Attention to the Details

Don’t just look at the low mortgage rate your agent is offering. What prepayment options are available? Is the mortgage portable? What happens if you need to move or break the mortgage contract? Are there any transfer fees?

4. Challenge the Mortgage Rate

Ask your mortgage broker to compare mortgage rates at banks, local credit unions, and non-traditional lenders. It’s his or her job to find the rate that best suits your needs.

5. Don’t Lie

Chances are your mortgage specialist will know and you’ll ruin the relationship you’re trying to build.

6. You Can’t Get What You Don’t Ask For

Ask your mortgage broker about additional offers and bonuses.

7. Be Realistic

It’s important to note that your mortgage broker isn’t a miracle worker. Sometimes he or she won’t be able to find a lower rate. With that being said, just because you’ve had some financial hardships in the past doesn’t mean you can’t try to get a good deal! Work with your mortgage broker in order to review all available options.

How to Know When You’re Ready to Purchase a Home

Think you are ready to be a homeowner? Here’s exactly how you can tell!

1) You have a budget

Factor in homeowner’s insurance coverage, property tax, fees, upkeep costs, and the best  available home mortgage rate.

2) You have a sizeable down payment.

Generally, you’ll need a down payment worth 20 % of the house price.

3) You have a reliable source of income.

Getting a home is a long-term financial dedication, so you’ll require a steady income to cover those month-to-month mortgage payments.

4) You have an emergency savings fund.

If you have enough money to cover three to six months of your living expenses, you’re one step closer to being prepared.

5) You have your financial obligations under control.

Lenders like to ensure you’ll have more than enough money each month to pay your living expenses. Before they’ll give you a low mortgage rate, they take a look at your debt-to-income ratio.

6) Your credit report is in good condition.

You don’t have to have best credit to become a homeowner; however a good history can help you lower the interest payments on your Canadian mortgage rate.

7) You can make a long-term commitment.

Are you prepared to stay put for a minimum of three to five years? Normally, that’s how long you’ll have to keep the house in order to recoup your trading expenses.

8) You are prepared to become a property owner.

Don’t buy simply because you can. You have to ensure you’re ready.

Ways to Obtain a Mortgage When You’re Self-Employed

Own your own company? Find out how you could have a house too!

Data shows that almost 20% of all income earners in Canada are now self-employed. Today, lenders desire evidence of a steady income. Here are a couple of ways to ease the process and raise your possibilities of obtaining a low mortgage rate.

Document Every Penny

You’ll be required to record your income when preparing for a self-employed mortgage pre-approval. Stated Income/Stated Possession (SISA) mortgages are made without any sort of documents or bank records to verify income levels.

Keep Your Credit in Check

When it involves securing the very best mortgage rate, a good credit history and solid credit history rating will always work in your favour.

Bump Up Your Bank Account

A large down payment and hefty savings account can help encourage a lender that you’re much less of a liability when it comes to credit.

Consider a Joint Mortgage

The best way to enhance your opportunities of scoring the best mortgage rate is to take out a joint mortgage with a person who has a full-time job.

Talk to a Broker

Having a certified Canadian mortgage rate broker on your side could make a substantial difference for self-employed individuals.

Merely due to the fact that you’re self-employed does not mean you have to surrender your dream of being a homeowner. Contact FamilyLending.ca today to learn just how you could start climbing up the real estate ladder.