Skip to content

Posts tagged ‘credit’

30 Days Left To Claim Your $10,000

200451745-001

Yeah, there’s $10,000 there. I counted. Really.

This is going to sound like a pitch – but I promise there are no balloons, streamers, or wacky waving inflatable arm-flailing tube men here. If you’re a first-time buyer, there has never been a better time to buy a new home… Read more

Your Home Is Not An ATM!

Something’s been bugging me for a while now, and I’ve been meaning to write about it. You know the commercials on the radio and TV. I probably hear them half a dozen times a day, more if I’m listening to a Canucks broadcast.

“Making your home equity work for you…..”

“If you own your home,” say the commercials, “we’ll lend you money.”

Sounds great, right? Free money! Against the value of my home! More and more, Canadians’ chief source of wealth these days is the equity built up in their home. Equity is the difference between the market value of the home and the outstanding balance on the mortgage on the property.

Homeowners should approach equity take-outs with extreme caution, because managed improperly, they can cost dearly. Many financial advisers will tell you it makes good financial sense to refinance high-interest debt such as personal loans, lines of credit, and credit card debt with low-interest mortgage money. While this is true, one needs to first examine how the indebtedness happened. If you’ve got $30,000 of student loans at a high interest rate, it makes good financial sense to pay them out with lower interest money. However, if you’ve racked up $30,000 of credit card debt at really high interest rates by consistently spending more than what you make, what is stopping you from doing it again once you’ve paid it out?

The point is: spend within your means. Irresponsible credit use is one of the biggest financial problems in this country, if not the world.

Some people have the mistaken assumption (and perhaps some members of my profession are partially responsible) that real estate prices only go up. We don’t have to look far back in history to bust this myth. If you had purchased a home in Victoria in the spring of 2008, with a 5% down payment, there is a very good chance you owed more on it than it was worth by February or March of 2009. Real estate prices fluctuate, and the worst situation you can be in is to owe more than you could get for your home if you had to sell it.

Treating your home like an ATM is a great way to end up in that situation.

Tim Ayres – Sooke Real Estate Professional

Your comments are welcomed and encouraged!
Just use the form or link below this post.

You can bookmark this post using the button below,
or subscribe to this blog for free updates using the big buttons on the sidebar!

The Crisis Of Credit Visualized

Below is an excellent video (RSS and e-mail Readers may need to click through to view it) outlining how the global economic downturn got started with the credit crisis in the U.S. If you’ve heard the term sub-prime and aren’t exactly sure what that’s all about, this video does a great job explaining it.

Bear in mind that this is U.S. focused, but it’s a very informative look at how this mess all started. It will also help you understand why Canada’s banks are in good shape: they avoided much of the financial instruments mentioned in the video, and our conservative banking practices and tighter regulations prevented them from getting over-leveraged, and from giving money to people who shouldn’t have qualified.


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Tim Ayres – Sooke Real Estate Professional

Your comments are welcomed and encouraged!
Just use the form or link below this post.

You can bookmark this post using the button below,
or subscribe to this blog for free updates using the big buttons on the sidebar!