Preparing your credit for a mortgage application

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While it's easier than ever for Canadian homebuyers to lock in low mortgage rates, it's important for individuals to understand how their credit will influence the process. While current mortgage rates are currently at historically low levels, the best rates will only be made available to borrowers who can show exemplary credit on their mortgage applications. It's with this in mind that prospective homeowners should do all they can to prepare their credit for the mortgage application process.

Check your credit score
The first step for homebuyers should be to receive a copy of their credit report. Canadians are allowed to order as many free copies of their credit report as they require each year, as long as the request is made in writing for a printed copy delivered by mail. While these requests will be noted in an individual's report, they will not affect their credit score. Continue reading

Put away the plastic: Canadian consumer debt levels are through the roof

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Whether Canadians are aware of it or not, many of them are living beyond their means and buying anything their little hearts desire. New car? Why not! Who cares about the stacks of bills that need to be paid when there is an opportunity to drive around the city in style?

In time, that falsely lavish lifestyle is sure to come crashing down. The credit cards are maxed out. Interest on the multitude of non-mortgage loans and payments is enough to fund an extra car payment or two, and it's hard to keep up with the payment schedule – let alone afford to keep the lights and water on.

That may indeed be a dramatic example of out-of-control problem consumer spending, but experts are a bit worried. Actually, more than just a bit worried, considering consumer debt levels are the highest they've been – 150 percent of after-tax income per household – according to a recent report by TransUnion. Continue reading

Mortgage rules to help Canadians eliminate debt in 5 years, survey says

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Love 'em or hate 'em, more reports continue to emerge indicating the new rules governing Canadian home loans will help people get out of debt sooner.

Most recently, BMO Economics, part of the BMO Financial Group, which has been an avid supporter of the mortgage rules, released the results of a survey that showed more than half of Canadians expect to be debt-free by 2017. That'd be a handy trick, considering the average current debt-to-income ratio for Canadians is about 152 percent. But still, a majority of Canadians feel they can accomplish the Herculean task, and the new mortgage rules are a driving factor in that optimism.

"We expect that the combination of the new mortgage rules and some underlying moderation in borrowing will soon help cap Canadian household debt as a share of income," said Doug Porter, deputy chief economist with BMO Capital Markets. Continue reading

How to avoid a credit repair scam

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From the time we get our first job to when we get our hands on our first credit card, we are constantly informed of the importance of maintaining a strong credit rating. In Canada, just like many other countries throughout the world, people with good credit are more likely to obtain financing for a car loan, mortgage, insurance or another big-ticket expense than individuals with poor credit.

Credit can be a needed boost, but it can also be debilitating. Learning how to protect yourself from becoming a victim of fraudulent activities is one way to keep your credit score and report in strong standing.

Several companies make the bulk of their money by targeting poor-credit consumers with promises to clean up their credit report. A promise many hurting consumers will believe because they need assistance to qualify for a new home or expense. But in most cases, the companies cannot deliver on their promise, leaving the consumer with more debt and in a worse hole than when he or she started the process. Continue reading

Household debt has Canadians worried about holiday spending

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Household debt in Canada is at record highs, and many Canadians are worried about holiday shopping impacting already-stressed budgets.

According to a recent Globe and Mail report, 19 percent of Canadians polled by Angus Reid were most concerned about debt they would compile during the holiday season. Meanwhile, 21 percent of respondents with incomes less than $50,000 are most distressed about paying their bills next year.

Some Canadians have built immense household debt after purchasing homes they can't afford, as low interest rates allowed lower-income citizens to enter the real estate market. Continue reading