Mortgage border up again

Again the limit for an NHG mortgage is going up. In 2018, a mortgage with a guarantee can be taken out for a home up to 265,000 euros.

Limit for NHG mortgage in 2018

Limit for NHG mortgage in 2018

If you buy a house up to 265,000 euros in 2018, you are eligible for a National Mortgage Guarantee (NHG) mortgage. This increases the cost limit for the guarantee by 8%. This year an NHG mortgage can be taken out for a home of 245,000 euros.

For an investment in energy-saving measures, more than 15,000 euros can be borrowed under NHG next year. The cost limit then comes to 280,900. This has been announced by the Home Ownership Guarantee Fund, which is behind the NHG.

Note: With an NHG mortgage, 6% additional costs are taken into account as standard. The maximum mortgage under NHG is therefore lower.

More buyers eligible for National Mortgage Guarantee

More buyers eligible for National Mortgage Guarantee

The increase in the NHG limit is a response to the increased house price. The guarantee fund behind the National Mortgage Guarantee wants to continue to offer starters the opportunity to finance their first home “in a responsible manner”.

Just as starters are under pressure from the heated housing market, less housing allowance can be financed under NHG. The number of homes that are eligible for the guarantee has fallen from 90% in 2012 to below 70%.

The National Mortgage Guarantee offers a safety net

The National Mortgage Guarantee offers a safety net

The National Mortgage Guarantee offers a safety net if things go wrong, for example in the event of work disability, unemployment or divorce. The guarantee fund offers help with payment problems and can, under conditions, cancel the remaining debt.  mortgage with a guarantee can be taken out for a home up to 265,000 euros.

Starters who buy their first home above the asking price and that finance it to the maximum, run a higher risk.

What does your debt ratio say about you? | Debt Consolidation

We regularly hear about the debt ratio (also known as “debt ratio” or “debt level”) in the media (here, here and here again). It is indeed an important financial indicator to know the financial health of an individual or a company. An explanation over at http://wonderfactory.org

A bank, a financial institution, a lender, an investor or other will certainly want to know your debt ratio before you give more credit. This is normal because this indicator makes it possible to judge if you will be able to respect your monthly payments taking into account your income.

How to calculate your debt ratio?

How to calculate your debt ratio?

The calculation of the debt ratio is relatively simple. It is a question of adding all his income (work income, pensions, investment income, rent income, etc.) and dividing it by the sum of his recurring monthly payments (car payment, rent or mortgage). insurance, taxes, municipal and school taxes, payments on debts, etc.).

The result of this calculation gives a figure that can be expressed as a percentage, which is your debt ratio.

It is important to note that expenses not arising from “debts” in the broad sense are not counted in monthly payments. Thus, grocery, restaurant, telephone / internet / cable, electricity (Hydro-Québec), gasoline, recreation, etc. expenses will not be counted.

What is a “good debt ratio”

What is a "good debt ratio"

Beyond the calculation of the debt ratio, one must understand what the result means. In all cases, a low debt ratio is preferable. However, one should not worry if it is below 30% .

  • 0 to 30%: Excellent
  • 30 to 35%: Acceptable
  • 35 to 40%: At risk
  • More than 40%: Danger

If your debt ratio is above 40% , your situation is considered critical and you will have a hard time getting new credit. In addition, for your own financial health, you should stay away from such a high level of debt so that you have enough money for your savings and essential expenses like groceries, gas and some Hobbies.

How to reduce the level of debt?

How to reduce the level of debt?

If your debt ratio is critical and you want to lower it, there are no miracle recipes. You must either (1) increase your income and / or (2) reduce your monthly recurring payments.

To increase your income, you might consider getting a salary increase, changing jobs or finding a second source of income. This option is far from easy for everyone and may not solve the real underlying problem, the lack of control over your expenses.

So, you can turn to the second solution, which is to reduce your monthly payments. To do this, the very first thing to do is to stop buying on credit. Whether it’s your furniture, appliances, travel, renovations or anything else, these are expenses that should be paid in cash. This kind of spending is frequently the reason behind a high level of debt.

Then, review your budget and make sure to respect certain ratios for your expenses in housing and transport. Your home should not cost you more than 25 to 35% of your disposable income and you should not exceed 15% for your transportation expenses (car, gas, maintenance, insurance, etc.).

Of course, you can adjust these numbers if you are willing to make some concessions elsewhere in your budget. However, remember that it is the recurring monthly payments that count in the calculation. So, if you cut food for the benefit of your home, it will negatively affect your debt ratio even if in total, your expenses are equal.

What if my financial problems affect my debt ratio?

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If over the years you have accumulated a large amount of debt and you realize that a large part of your budget is confined to the payment of these debts, solutions are available to you.

First, you can turn to your financial institution and ask for debt consolidation. Debt consolidation will consolidate all your debts into one monthly payment.

This one-time payment is advantageous because the interest rate is generally lower. However, it is possible that your institution refuses you such a loan, precisely because of your high debt ratio which puts off them. If this is the case, a trustee in bankruptcy can offer you other solutions such as the consumer proposal.

The consumer proposal is similar to debt consolidation, but it also reduces the total amount of debt in addition to completely freezing interest. This is a statutory mechanism administered by a trustee to provide you with legal protection. This solution negatively affects the credit record but allows you to get out of the debt cycle once and for all.

Pawnshop: How does this type of loan work?

 The pawnshop is one of the oldest forms of credit. It has existed for over 2000 years in China and was established in Europe in the Middle Ages.

Pawnshell is a loan obtained after the deposit of property as collateral. The amount of this loan is proportional to the value of the property deposited by the borrower. The lender then retains the property as his own property or can even sell it if the borrower has not kept his repayment commitment within the time stipulated by the contract.

In which case should you ask for a pawnshop?

In which case should you ask for a pawnshop?

In practice, a pledge loan application is less restrictive than a conventional loan application. Like a personal loan without a credit check, the loan application can be very fast. This is why it can be useful when a fast money loan especially if the applicant already has several credits in progress.

In addition, part of the attraction of this quick loan is that you do not want to know why you need this money. The object can be claimed at any time within the period specified in the pledge acknowledgment, subject to full repayment of the loan, plus interest, service charges and storage.

How to apply for a pawnshop?

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The filing procedure is the same everywhere in Canada. There are many businesses willing to lend on pledge in Canadian cities. The pawnbroker asks the person how much they would like to borrow. If it accepts the object it puts in warranty, it makes a quick estimate. He then indicates the amount he is willing to advance and gives the client a pledge. In most cases, this loan will not exceed 25% of the value of the object left as collateral.

Which objects can be used as part of a pawnshop?

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The consumer can come with one or more goods. These goods are various objects and whatever their value. That’s why they are often a collection of heterogeneous objects. However, in Canada, pawnshops are increasingly specializing in precious metals.

Is the consumer well protected?

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With a bad reputation in the past, potential applicants may have some reluctance towards this loan. However, there is now a law on consumer protection. It does not contain only civil penalties, because the Office of Consumer Protection can, under this law, prosecute traders who do not comply with the law.

For example, according to this law, pawnbrokers must disclose to the credit agreement the annual credit rate they charge and not just the monthly interest rate. In the past, this part of the contract was frequently forgotten.

How to choose your pawnbroker

How to choose your pawnbroker

 

The Consumer Protection Act requires pawnbrokers to hold a license. Yet, today, many pawnbrokers still do not have an official license. We advise any applicant to check the validity of the lender’s license and to remain particularly vigilant. The pawnshop can be a very good alternative to other forms of personal loan for bad credit or payday if it is studied carefully.

The pawnshop is a good formula for an urgent loan of money and when you already have several credits in progress. The steps are particularly simple and the deadlines are very short. However, it is imperative to think carefully to study the legality of his lender and the confidence that we have towards him.

5 financial questions to answer before your wedding

Here are five things to talk about openly before getting married or living together.

 

Do not lie about debts and loans

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Many people think that debts and loans are everyone’s personal thing, but are they the same with partners? Even if you have separate accounts , financial problems can have a major impact on your entire household. Whether it’s a non-bank loan or a car leasing, never conceal anything. You should hold together on debt. Together, you can better prepare a repayment plan, or a debt-free partner can hold you back.

Lying is definitely not worth it. Especially if you have decided on a common mortgage. If you or your partner have a bad payment history, you will have to wait until your goals are met. But if you are honest, things can move faster. After all, more heads know more.

 

Skimmer or rake?

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Partners’ different attitudes to finance can play a bigger role in the relationship than you might expect. While one values ‚Äč‚Äčexperiences, the other favors material things or saves every crown, what if… What different priorities will be most apparent when the belts need to be tightened. An agreement on whose hobby it will save on can then lead to a really sharp debate.

It’s good to know your partner’s priorities. Sparrows and revelers must come to a common compromise that will at least partially satisfy both sides. Financial habits often come from childhood and are often a sensitive topic. Therefore, do not postpone their solution until the situation is tense.

 

Green joint management

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Talk about the common farming regime. Who will be in charge of household and rental bills , who will pay for the purchase and whether to set up a joint account.

There are basically three variants:

Keep in mind that whatever your means of money management , your funds acquired after marriage are part of the non-share ownership of the spouses. So it doesn’t matter which account they’re on.

 

Finance and children

If you’re planning kids together , it’s definitely an opportunity for another talk about finance. The question is not just whether you can afford a child in the current situation. You will also be faced with the decision whether to save on his university studies, extracurricular activities or what the amount of pocket money should be and from how many years he has given it to the child.

You will need to find answers to these questions together. It is important to clarify them right from the start , at least to avoid unpleasant surprises in your partner’s attitude.

 

Do you have plans for retirement?

Maybe a premature topic and maybe not. Chances are you both want to save for retirement. But do you have a common vision of what your pension should look like? Find a place to discuss your ideas now. Then you will not be surprised that your partner wants to sell a house and travel while you were planning to spend your retirement playing golf and watching TV.

Marriage: Save tax benefits right after the wedding

Save taxes immediately after marriage

before tax advantagesWhen the rings are changed, the party is celebrated and the wedding guests are gone, there are still some formalities that a young couple has to do.

Insurance companies and banks must be notified, landlords and other contractors must be informed, new passports are requested. And of course, the wedding guests are waiting for a few prints of the most beautiful wedding photos.

However, young people should also have sound financial provisions. Because in the worst case, the young couple gives away a lot of money.

Take the check and check it as soon as possible after marriage: Tax benefits secured? Bauspar contracts applied for? Marriage contract set up?

 Tip: Whether you have secured benefits with a wedding or not: With a wedding loan ) you get better conditions for two than alone. In some cases, rescheduling may even make sense.

 

  • Change tax code

After a wedding, both spouses must change to another tax class, regardless of any tax benefits, because the tax class I is reserved exclusively for single persons.

In which tax code the spouses change after the marriage, they can decide for themselves. There are two possible variants:

On the one hand the change of both partners into the tax class IV, on the other hand the change of a partner into the tax class III, while the other partner transfers to the tax class V.

Particularly interesting is the second variant (tax class III plus tax class V), because with this you can save taxes by marrying! This variant is known as spouse splitting.

Spouse Splitting: Save Marriage Tax Benefits

Marriage tax benefits

With the spouse splitting there’s real marriage tax benefits – but only if one of the two partners earns much more than the other!

By marriage, saving taxes works for spouse splitting because of the fact that the income is aggregated by both partners and then divided into two equal parts (split). These two parts are the basis for the income tax of both partners, which has a positive effect especially when there is a large difference between the income of both spouses.

An example: married couple A earned a total of 80,000 euros. One partner earns 60,000 euros, the other partner 20,000 euros. Couple B also earned a total of 80,000 euros. Here, however, a partner earns the full 80,000 euros while the other partner has no taxable income.

Without spouse splitting, couple A would get an income tax total of € 19,729, and couple B would get a whopping € 25,428.

With the spouse splitting, however, the matter looks different, because here pay both pairs each 18,014 euros! Couple A saves 1,715 euros per year, while couple B gets tax savings of 7,414 euros per year!

Couples with significant differences in income thus save a large part of their income tax on spousal splitting, while for couples with similar or similar incomes tax savings are low or absent.

  • Riester pension

Who concludes a Riester contract, gets from the state a subsidy on the deposits – but only who is compulsorily insured in the statutory pension insurance.

However, married partners who are not eligible for this support (for example, the self-employed, 450-euro jobbers without statutory pension insurance and civil servants) can still receive these grants if the other partner is eligible. So only one spouse has to be eligible for a grant, so that both receive the state subsidies.

  • Bausparvertrag

Although there is no direct advantage of a marriage in building society savings contracts, married couples should nevertheless examine their options here. The bill is quite simple: With two Bauspar contracts you get clearly “more apartment” or “more house” than just one.

In the case of a real estate acquisition, on the one hand, it is much cheaper for borrowers if the equity capital is higher (lower interest rates on loans). At the same time, more favorable terms are once again offered if there are two borrowers for a loan. The risk that the loan can no longer be serviced is lower here – which rewards the bank with lower interest rates.

 Tip: Note the housing premium : Married couples are subsidized with 1024 euros per calendar year.

Reading tip: A installment loan is more useful in some cases than a real estate loan.

 

  • life insurance

If there is already a life insurance before the wedding, the spouse should be registered as a beneficiary after the marriage. This avoids later inheritance disputes, especially in the case of previous marriages and children.

Basically, all existing insurance (including household and liability insurance) should be examined after a marriage. Under certain circumstances, significantly cheaper conditions are possible.

  • Marriage settlement

Especially at the beginning of a marriage there is harmony and unity – a marriage contract is, however, intended for the bad times. With a marriage contract, married couples regulate different things, especially in the case of divorce.

Above all, three areas are regulated here:

  • The matrimonial property – Without marriage contract in the case of a divorce, a so-called gain compensation is carried out. If you do not want that, you can keep it in a marriage contract.
  • The Compensation – This is about any pension entitlements that were acquired in the course of the marriage and after marriage may be in question.
  • Maintenance after marriage – Anyone who wishes to make deviating agreements to the statutory provisions can do so with a marriage contract.

A marriage contract is only valid if it has been certified by a notary.

Directly after wedding: determine benefits as soon as possible

Whether or not you want to secure benefits through a wedding: ask as soon as possible after marriage what things are important to you and which are not. Because everyday life often returns faster than you think – and postponed duties quickly fall into oblivion.

Read Hint: If you are just married and have just moved in, follow our renovation tips .

Is canceling a credit card bad for your credit rating?

Cancel or not a credit card: this is probably the most frequently asked question about personal finances. Everyone wants to know if they should cancel a credit card that is no longer used or simply use force and charge nothing again.

The problem is that both answers are good. It depends on several factors such as your goals, your credit history, your credit rating, and your spending habits. The main problem in canceling a credit card is that this cancellation will not be without consequence. This will affect your credit rating and other aspects of your financial life will also be affected.

There are many good reasons why you would like to cancel a credit card, including wanting to reduce the number of cards you have, try to rely less on credit or find a card that best suits your needs. Whatever your reason, consider the following factors before canceling your credit cards.

Your credit history and the age of your accounts

You build a credit history when you use a credit card. All your actions, payments, and even mistakes are recorded on your credit report. Your credit history is very important because it provides information about your credit habits to future creditors and lenders when they need to check your credit rating. Before canceling a credit card, you need to know whether or not the cancellation will negatively affect your antecedent and so on your credit rating. If you want to cancel one or more credit cards because you have too many, cancel the most recent ones. Try to always keep your oldest cards. Canceling an old card will not automatically affect your credit rating since accounts remain visible on your credit report for 10 years.

By cons, after 10 years, you may regret having canceled this account that could have 10 years more. because the account could be 10 years older.

Points and fees

Does the card you want to cancel cost you a fee? Or do you accumulate points that are really useful to you? These are some questions you need to ask yourself seriously before deciding to cancel a credit card. If you have a rewards credit card with high annual fees, ask yourself if these points are worth the cost.

Finally, if you decide to cancel a rewards credit card, make sure you use the points or at least know what will happen to those points after the cancellation. It would be a shame to waste all the points accumulated with a simple cancellation.

Your percentage of use

Your credit usage percentage is the factor you need to pay the most attention because it will have a direct and immediate effect on your credit rating in case of cancellation. Your credit usage percentage is the amount of available credit that you must use in relation to the amount you actually use. You can calculate this amount by dividing your current credit card balances by the total limit of your credit cards. In general, you should make sure your usage percentage is 30% or less.

For example, say you have 3 credit cards and each has a limit of $ 5,000, which means your total credit limit is $ 15,000. If you currently have a balance of 4,000%, this means that your usage percentage is 26% (4000/15000), which is very high.

The use of credit or your total debt level is one of the top five factors that directly affect the calculation of your credit rating. If your credit percentage is too high, your credit rating will be negatively affected. In addition, potential lenders do not like credit utilization ratios that are too high. This shows that you could have a debt problem.

That is why it is important for you to consider all this before canceling a credit card, especially if you might be looking to apply for a mortgage or loan in the near future. A low credit rating and a percentage of credit usage may prevent you from being approved.

The balance of your cards

This factor is certainly less important than your credit usage, but you should still consider it anyway. If you decide to cancel a credit card, you must make sure that you have refunded all the balance owing. A provider may allow you to cancel a card even if it has a balance. Setting aside an outstanding balance or interest charges could seriously affect your credit rating.

Make the right choice for your situation

Your credit rating is very important, but it is not as important as being debt free or having good financial management. If having too much credit card affects your credit rating or your debt level, we believe it is in your best interest to manage your financial situation before your credit rating. But we also believe that you need to project yourself into the future a bit more, especially if you see a mortgage or loan.