Today everybody has their share of debt, whether it’s on credit cards, personal/student loans, lines of credit or mortgages. If you are uncomfortable with your debt load- let’s talk!
Consumer debt has risen over the past year. Paying down your debt as quickly as possible just makes sense. Monitoring your spending by budgeting using any one of the many online apps could be the solution.
Upon qualifying for a mortgage these three points are very important to a lending institution, when they evaluate your application:
- Reported income on your tax return (Line 150),
- Your credit report
- CRA for the previous year must be paid in full.
There is always the option of increasing your existing mortgage to pay off your high interest debts. However, the banks and mortgage companies will require a current appraisal on your home as well as proof of income. Another thought is to add a second mortgage to consolidate your debts.
There are pros and cons to both options. Again, we can talk about this!
The Bank of Canada has recently increased their rate by .25% raising the Prime Rate to 3.7%. The financial institutes base their Variable Rate Mortgage rates on Prime. Consequently, it is smart to pay down your collective debt as quickly as you can in preparation for the next interest rate rise.
A five year fixed term has increased slightly, they are now in the range of 3.19% to 3.79% so if you are concerned with your variable mortgage, which will fluctuate with rising Bank of Canada Rates, I strongly suggest discussing the pros and cons of Fixed vs Variable Rate Mortgages.
As a mortgage broker, I am here to help you make the right financial decisions and become debt free down the road.
Lisa Upshaw is a Mortgage Broker with Open Door Mortgages and regularly contributes to Karen Paul’s Real Estate Blog.
Open Door Mortgages
LisaUpshawMortgages.ca | 289-259-5095