As a homeowner, how do you know when it’s time to refinance your mortgage? Here are some factors to consider when making this decision.
How can you tackle household debt this summer?
Are you finding yourself in debt this summer? You are one of many Canadians who are experiencing household debt as a result of inflation pushing the prices of everything to the sky. Making mortgage payments, buying groceries, and paying bills all seem like much more painful hits to the bank account these days. If this sounds familiar, don’t give up hope! Here are some tips to help Canadians like you tackle household debt this summer.
Make payments on time
Making payments on time, and making at least the minimum payment amount, will help you deal with debt this summer. When you’re late on payments, or don’t pay enough, late fees and penalties are often the end result. These can cost you even more the longer you delay your payments. The more you owe, of course, the harder it is to pay it off. Do your best to make a point of paying the minimum amount on time to avoid these fees and to keep your credit score high, so you won’t have to deal with higher interest rates down the road.
Consider using budgeting apps
Budgeting apps are handy little creations that allow you to keep track of your debts and spending from anywhere. Different apps have different features and functions, all with the goal of helping you manage your money better. Two of our favourite apps are Goodbudget and Mint. Goodbudget employs the envelope system in a digital form. You divide your money into different spending envelopes, like utilities, groceries, eating out, and mortgage payments. Once the envelope is empty, you stop spending out of it for the month, so you’re not overspending in any category. Mint connects your bank account to the app, so you can track upcoming bills, and know how much you’re spending as it happens. This app is a bit like carrying the bank in your pocket.
Debt consolidation is for more serious forms of debt that require a bit more work to get a handle on, but it can be a big help for people who need it. This process takes all your debts and combines them into one lump sum payment that you make monthly, all with the same interest rate. This rate is often lower than the rates you were dealing with when you had several separate payments. With one payment, you can keep track of your debts easier, and the lower rate gives you a bit more wiggle room.
Debt consolidation does lower your credit score in the short term, but by making consistent payments, this will be a temporary drawback. A temporary drop in your score is better than a long-term struggle maintaining your credit.
Don’t add new debt
As long as you’re dealing with debt this summer, do your best not to take on new debt. This includes anything from new credit cards or increased limits to car loans and home renovations. You likely have some things you want to spend money on, but now may not be the time to do so if it’s not absolutely necessary. For example, a kitchen remodel or upgrading your car can wait until you’re in a more stable financial situation. The more debt you have to deal with, the more stressed you will find yourself and the harder it will be to prioritize your payments and ensure you’re covering the minimum for all your expenses. Plus, something as simple as increasing your credit limit could lead to increased spending if you have a tendency to overspend. Basically, don’t give yourself more opportunities to put yourself into debt this summer.
Contact a broker
If you’re dealing with debt this summer, it can certainly be overwhelming. Interest rates and the rising costs of consumer goods, like gas and groceries, are making it easier for people to slip into debt and feel like they can’t afford everything they need to get by. That’s why contacting a mortgage professional can be an important part of handling debt, particularly household debt.
Home owners with enough equity in their home may be able to refinance their mortgage for a lower interest rate, or extend their amortization period. Both of these options mean borrowers will owe less money each month, and they can increase their cash flow to pay off debt. Brokers often can connect clients with products not widely available to the public, so for any home owner in debt, seeing a broker is a good place to start.
Debt is never easy, and it’s certainly never enjoyable, but there are ways to ease the pressure of debt on your life. Whether the solution comes in the form of debt consolidation, refinancing, or adjustments to your spending, home owners have options to help them handle their debt this summer. If you’re not sure where to start, reach out to us! We can help you get a clear image of your situation, and how to begin your path to debt-free living.
If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.