Say NO to Payday Loans

September 30th, 2013

Clicking through the TV channels the other night, I was appalled by the number of ads for payday loans. They make is seem easy (it is). They show happy, smiling people and make it seem like a reasonable, temporary option (it isn’t).

Payday loans are easy to get, but they are about the worst decision you could ever make financially.

Payday Loans - The sharks are coming!

Here are the reasons why you absolutely NEVER, ever, ever get a payday loan.

1. Beyond High Interest

If you look at the amount they “charge” you, or deduct from one advance payment, it looks small … maybe even reasonable.

There have been instances where  annual interest rates of 8000% have been changed.  No, I didn’t accidentally add a few extra zeros … 8000%!

In BC the amounts that can be charged by loan companies are regulated. However fees can still range from $17 to $31 per $100 borrowed.  $31 per $100 amounts to 754% interest per year!

If you keep on getting advances, you will soon be in a  downward loan cycle that will never end.  It will just keep on getting worse every month.

2. Too Easy to Renew

Once you qualify for the first money advance, it is very easy to renew every week or every month. You can even renew before you have paid back your last loan. If you thought you had problems paying off your credit card bills, this is even worse.

3. Your Credit Score Will Be Negatively Impacted

When it comes to calculating your credit score, the “type” of credit you have tapped into makes a difference. Payday loans have a huge and negative impact on your credit score.

What are your Options?

  • Family or Friends?  (pay them back immediately if you want to keep them by your side).
  • Ask your employer for a one-time-only advance.
  • Personal Bank Loan
  • Even tapping into your Credit Card is better than a payday loan.
  • Go into overdraft on your bank account can help temporarily. (My account lets me overdraft by $500 if I ever needed to).
  • Get your budget under control.
  • Take DRASTIC stop spending: measures NOW.

Another option is to consolidate your debt into your mortgage. With the new mortgage rules it has become harder to do this, but it is still possible.  Give us a call to discuss your options.

Once you have consolidated your debt into your mortgage, we will advise you NOT to rack up additional consumer debt. If you continue spending, you will end up in the same place again …  unless you take steps to control your money.

Look at MORE than JUST the Mortgage Rates

September 16th, 2013

It’s easy to get caught up in the idea that comparing mortgage rates will guarantee you get the best bang for your mortgage buck. While this may be true for particular situations, there are many scenarios where this strategy is not effective. Following are three reasons why it doesn’t always pay to make a decision based solely on rates.

mortgage-cloud

Reason #1
Your long-term plan and risk tolerance should determine which mortgage product is right for you. This product may or may not have the lowest rate.

For instance, there are cases where lenders will offer lower rates for insured mortgages. With insured mortgages, however, you’re charged an insurance premium, which is usually added to the mortgage amount. But if you’re not planning on keeping the property for a long enough time to offset that cost, it may be better to take an uninsured mortgage with a slightly higher rate. The cost difference you will pay with the higher interest rate may still be less than what you may pay in insurance premiums.

As another example, if you prefer to budget for a consistent payment and can’t handle rate fluctuations, it may be better to go with a higher fixed-rate mortgage. If you think current rates are low enough and you will be living in your property for at least five years, it may be wise to also opt for a mortgage with a longer term.

Reason #2
One of the biggest mistakes people make when merely comparing mortgage rates is failing to consider important factors such as prepayment options to help pay off the mortgage faster, whether secondary financing options are allowed, early payout penalties, or what fees are involved.

It’s not enough to simply compare mortgage rates because you have to know what “clauses” are contained within the mortgage deal. There may be cases where you will find a lender with the lowest rate and willing to pay for your closing costs, or even provide you with cash-backs after closing. I will always look at the clauses and inform you on what’s truly involved in signing up for your mortgage.

Reason #3
Lenders can change their rates at any time. As such, if you’re shopping for rates with one lender and then approach another that gives you a lower rate, it’s quite possible that the first lender has also dropped its rates. This is why it’s important to get pre-approved with a lender once I’ve helped find you a mortgage that fits your needs. In some cases, we can secure your rate and conditions for up to 120 days.

These are just three reasons why it’s not enough to merely compare mortgage rates. The mortgage rate you may qualify for is also highly dependent on your credit score among other things. In order to get the best mortgage deals, you need to have solid credit.

As always, if you have any questions or concerns about finding the best mortgage product for your unique needs or your credit score, Justin Blacklock and Mike Averbach are here to help! Just give us a call 604-736-1855  or fill our our on-line contact form.

Getting Rid of Your Debts FAST!

September 15th, 2013

A friend mentioned that we take a look at a TV program called “Till Debt Do Us Part.

Gail Vaz-Oxlade - Till Debt Do Us Part

Gail Vaz-Oxlade - Till Debt Do Us Part

The SLICE network program is hosted by financial expert Gail Vaz-Oxlade who uses tough love advice and techniques to help couples get out of debt.

In the programs I’ve watched,  couples are dealing with consumer debt issues ranging from $20,000 to a whopping $100,000.  This does NOT include their mortgages, if they have one.

Over the period of a month, Gail conducts a “reality” session where she shows a couple where their money is going and how much they actually owe.  It is no surprise to me that many of the couples have NO idea how much they owe. They are in total denial about their monthly spending.

In one episode, a couple was spending $8000 MORE each month than they were making.  In many of the episodes the couples are regularly spending thousands of dollars more than they are making … which is the reason they are in debt, and the reason they cried out to Gail for help.

Gail starts her tough love rescues by confiscating all debit and credit cards and by placing the couple on a cash diet.  And diet it is … variable spending (food, clothing, entertainment, transportation) is drastically cut.  Drastically cut! So far I’ve seen cuts of anywhere from a  50% to 90% DECREASE in the monthly variable spending budgets.

The totally amazing thing is, almost all the couples manage to cope with the cuts and some of them even have money left in their cash jars at the end of the month.

The second amazing thing is, the couples develop debt payback plans that get rid of their debts in three years or less.  One couple went from racking up a $60,000 debt to developing a plan to pay it off in less than two years.

The show is well worth watching.  You will be entertained and educated.  The SLICE network regularly runs old and new shows.

The “Till Debt Do Us Part” series has several specialty programs including a series of shows focusing on couples who have huge mortgages and are on the verge of losing their homes.  The most current set of programs focuses on couples about to have a baby, or more babies or couples who can’t afford their kids!

This season, Gail has a new series called “Princess” … if you guessed it is about spoiled women who are totally selfish, indulgent and who are overspending themselves and their families into near bankruptcy, you guessed right!

My advice is to watch a dozen or so of the shows.  If you don’t get the SLICE network you can watch many of the episodes online.

Here’s a link to Till Debt Do Us Part
In addition to the schedule and online episodes you will find some great articles and extra videos on budgeting and debt reduction.

Here’s Gail’s Website >> Gail Vaz-Oxlade
Gail has loads of great advice on her personal website, articles, worksheets,  and links to her books.

http://www.gailvazoxlade.com/

Tips for Home Buyers, Home Maintenance and Renovations

September 8th, 2013

I just spent an hour browsing through the CMHC (Canada Mortgage and Housing Corporation) website and was amazed by the wealth of information they have for home buyers and home owners.

Canada Mortgage and Housing Corporation

 

For those of you new to home ownership and mortgages,  CMHC provides mortgage loan insurance that enables you to buy a home sooner with a minimum down payment of 5%.

The  CMHC  site has dozens of informative articles and videos aimed at helping you buy, maintain and renovate your home.

Here’s a synopsis of the information and where to find it:

Buying a Home

The information in this section includes a Five Step Home buying Primer as well as information on; Buying Your First Home, Choosing a Neighborhood, Buying Condos and information on Government of Canada Home Ownership Incentives.

CLICK HERE for information on buying a home.

Maintaining a Home

For most Canadians, their home is their most important investment. It’s where your family spends a lot of time, so keeping it healthy, well tended and safe is important. A regular schedule of seasonal maintenance and repairs can help you protect your investment by putting a stop to the most common and costly problems before they occur..

CLICK HERE for information on maintaining your home.

Renovating Your Home

Planning is the key to a successful renovation. To help you plan your renovation project, CMHC has information and easy-to-understand tips that can help you assess your requirements and learn the key questions before you get started.

CLICK HERE for information on how to successfully renovate your home.

Are you buying a home for the first time?  Do you need CMHC backing?  Let us guide you through the whole process … it’s easier when you know how!    Call me now (Justin Blacklock)  and we can get started right away!  604-736-1855

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Should I Have a Home Inspection

August 25th, 2013

A home buyer should always have a home inspection when purchasing a home. A home inspection is an examination of a property to evaluate the overall condition of a home as well as the major systems and components. In other words, every inch of the home—inside, outside, under and over—from the crawl space to the chimney and roof.

What is Inspected

A typical home inspection includes a walk around the exterior of the home to see if there are any glaring problems, such as loose siding, dry-rotted window frames and cracks in the foundation. The inspector will also verify the roof is in good condition.

he home inspection will also include a check of all appliances to be sure they are working properly. Dishwashers, toilets, sink faucets, tubs and showers will be checked for water pressure, leaks, evidence of past water damage.  The furnace and hot water heater will be checked to ensure they are working properly and the inspector will probably ask the age of all appliances and systems.

Other interior systems the home inspector will check include electrical, HVAC, plumbing, insulation, floors, ceilings and walls, windows and doors. If the home has a fireplace, the inspector will verify it is clean, look for cracks or loose bricks in the chimney, ensure flashing is securely attached around the chimney and that a chimney guard is attached to prevent birds and small animals from getting inside. (Only Wood Energy Technology Training certified inspectors are qualified to inspect wood-burning appliances).

The home inspector will provide you with a detailed inspection report, including recommendations for repairs or improvements. When you receive the report (usually within 2-3 days) you can decide if you will ask the home seller to pay for any work you want done as part of your offer to purchase.

If you have any questions about buying a home talk to us, and we’ll walk you through the decision making process.   Call Justin at  604-736-1855.

 

Additional Expenses Home Buyers Should Budget For

August 8th, 2013

Goods and Services Tax (GST)

If you buy a brand new home (new construction) it is usually subject to Federal Goods and Services Tax (GST). The current tax rate is 5% but a partial rebate may be available under certain circumstances. Our job as your mortgage broker is to help you figure out what programs you are eligible for.

Appraisal Fee

A professional appraisal will do a physical inspection of the property, carefully noting information about the number of rooms and the general condition and appearance of the home. Then the home will be compared to comparable properties and a value will be assigned. The cost for an appraisal is generally around $200.

Home Inspection

You should always have the property undergo a full inspection. The inspector knows what problems to look for and will issue a full inspection report. This will give you the option of declining to purchase, asking for repairs,  re-negotiating the price, or carrying through with your original offer to purchase.

Moving and Redecorating Expenses

An expense that isn’t often considered a “closing cost” is that of paying for a mover to transport your furniture and household items to your new residence. Also keep in mind you’ll want/need to buy home décor items and possibly furniture, fencing, and other items for your new home.

Electricity and Telephone Transfers

Home buyers should expect to pay about $75 each to have power and telephone services transferred from a former to a new residence.

ACERAGES, RECREATION AND INVESTMENT PROPERTIES

If you are purchasing outside the city, on an acreage or private development you may also have to consider:

Tests for Water Quality

A water quality test will be required if you are purchasing a property that uses well water. The cost for this type of test ranges from about $100 for a “do-it-yourself” test to several hundred to pay a professional to conduct this test as well as a test to determine the flow rate of the well.

Septic Field Test

If the property you plan to buy has a septic field, it’s a good idea to have it tested for leaks or other problems. The cost for this test is about $300. If a septic warranty is included in your purchase agreement, you can avoid paying this fee.

Fuel Adjustment Expense

If the home you plan to purchase uses heating oil or has a propane burning fireplace, you will be required to pay the owner for a full tank of fuel at closing.

Our job is to get you the best available mortgage and to advise you on many of the cost saving programs you may be eligible for.

 

If you have any questions about buying a home talk to us, and we’ll walk you through the decision making process.   Call Justin at  604-736-1855.