Blog Post

Finding Money For Closing Costs!

Luisa Hough • August 5, 2016

If you are planning on purchasing a property in the next couple of years, here is a really good video that will explain how you can find some extra money to put away into savings without impacting your lifestyle. Maybe you can even find enough money to cover the legal fees of buying your next home, that would be a nice challenge. 

Transcript

Hey guys welcome to Mostly Money. I hope you like what I’ve done with the place, and if not keep your comments to yourself.

So this week, I thought I’d talk about how you can find the money to save in the first place because I think a lot of people are on board with the idea that saving money is in fact a good idea but sometimes they struggle with finding that money to put away. So here’s one quick idea that I think anyone can put into practice, convert automatic expenses into automatic savings. Here’s what I mean by that, when it comes to automatic savings it works well for people because they forget how much they’ve been saving automatically but it’s the same with your expenses after a while you forget all the expenses that you’ve committed to. So there is the potential that you could reduce or eliminate some of these regular expenses that you haven’t looked at in a long time.

Here’s what you do, simply take a look at all your credit card statements and bank statements for the last two months. Go over it line by line and take a look at all the regular recurring automatic expenses and write them down. I’m talking Netflix subscriptions, TV packages, internet service, insurance premiums, subscriptions you have to magazines and newspapers anything that occurs on a regular basis on those statements. Write each of those items down,  next write down how much you’re spending per month for each of these items. The next thing you’re going to do is take each of these expenses and figure out if there’s any way to reduce or eliminate them. For example, Netflix subscriptions have three tiers: basic, standard, and premium .The premium services $11.99 per month and it gives you access to stream in ultra HD but if you don’t even have an ultra HD capable device you’re paying for something you don’t even need. Or maybe you can settle for regular HD and if you do that you can downgrade to the middle tier, the standard package which is $9.99 per month so that’s only $2 in savings but bear with me. Maybe it’s been a while since you first signed up for streaming service and back then you thought there’s no way i can get rid of cable just yet but fast forward two years and all you do now is Netflix and chill. Now is a great time to see if maybe you can reduce your cable package and easily save $30 per month or more.

When was the last time you looked at bank fees? If you haven’t looked at your banking package in the last couple of years, I’m going to bet it’s pretty easy to see that at least $5 per month. If you go through this simple exercise for all your regularly recurring expenses, I don’t think it would be a surprise to find that a lot of people can find $50 per month in savings, but now here’s the trick. Whatever savings you find you have to immediately commit to an automatic savings plan, for the exact same amount so if you find $50 in savings, you actually have to save the savings and put that $50 away into a savings account. You’re not going to notice a big change to your cash flow, but after 12 months of saving $50 per month that’s going to add up to $600! If you want to find a $1000 in annual savings you need to find $83.33 per month in expenses to cut out. The point is if you take a few hours to go through this exercise you can make a big positive change to your finances without having a big change to your lifestyle.

So to recap:

  1.  Make a list of all your automatic regularly recurring expenses.
  2.  For each of those items figure out if you can reduce or eliminate them.
  3.  Most importantly, whatever savings you find you have to direct either into a high-interest savings account or towards accelerating your high interest debt payments and that’s it!

If you’ve done this exercise before or you were inspired to do because you watch this video I would love to see what your results were. Let us know in the comments section down below how much money you freed up and thanks for watching!

Hey guys, thanks for watching Mostly Money. I hope you enjoyed today’s show don’t forget to subscribe to my channel by clicking on the button in the bottom right hand corner of your screen a
little thing that says Subscribe. There are lots of videos to explore my channel like this one. So, if you want to learn more about money and personal finance in a fun way check those out! If you have any questions for me you can reach out to me on Twitter at Preet Banerjee or you can leave your questions and comments down below in the comments section. That’s it for today see you next time.

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What is a Second Mortgage?

By Luisa Hough • February 19, 2025
If you're not all that familiar with the ins and outs of mortgage financing, the term "second mortgage" might cause a bit of confusion. Many people incorrectly assume that a second mortgage is arranged when your first term is up for renewal or when you sell your first home. They think that the next mortgage you get is your "second mortgage." This is not the case. A second mortgage is an additional mortgage on a single property, not the second mortgage you get in your lifetime. When you borrow money to buy a house, your lawyer or notary will register your mortgage on the property title in what is called first position. This means that your mortgage lender has the first claim against the sale proceeds if you sell your property. If you happen to default on your mortgage, this is the security the lender has in repossessing your property. A second mortgage falls in behind the first mortgage on your property title. When you sell your property, the lawyers will use the sale proceeds to pay off your mortgages in sequence, the first position mortgage is paid out first, and the second mortgage is paid out second. After both mortgages are paid off completely, you get the remaining equity. When you secure a second mortgage, you continue making payments on your first mortgage as per your mortgage agreement. You must also then fulfill the terms of the second mortgage. So why would you want a second mortgage? Well, a second mortgage comes in handy when you're looking to access some of your home equity, but you either have excellent terms on your first mortgage that you don't want to break, or you’d incur a huge penalty to break your first mortgage. Instead of refinancing the first mortgage, a second mortgage can be a better option. A second mortgage is often used as a short-term debt consolidation tool to help provide you with better cash flow. If you’ve accumulated a considerable amount of high-interest unsecured debt, and you have equity in your home, you can secure a second mortgage to lower your overall cost of borrowing. If you'd like to know more about how a second mortgage works, or if you'd like to discuss anything related to mortgage financing, please connect anytime!

Unsure About the Housing Market? Let's Talk.

By Luisa Hough • February 12, 2025
If you’ve been thinking about buying a property, whether that be your first home, next home, forever home, or a home to retire into, the current state of the Canadian economy might have you wondering: Is this really the right time to make a move? There is certainly no shortage of doom and gloom in the news out there. The truth is, that’s a tough question to answer in the best of times. It’s nearly impossible to know for sure what’s going to happen next with the housing market in Canada. It could heat up or it could cool down. So here’s some advice. Instead of basing your buying decision entirely on external market factors, like the economy or housing market, consider looking for the answers internally. When you stop looking at the market to determine your timing to buy a home, and instead examine the personal reasons you have for wanting to buy a home, the picture can become much clearer. Here are some questions to consider. Although they are subjective, they will help bring you clarity. Ask yourself: Does buying a property now put me in a better financial position? Do I make enough money now to afford a new home and maintain my lifestyle? Do I feel confident with my current employment status? Have I saved enough money for a down payment? How long do I plan on living in this new home? Is there any scenario where I might have to sell quickly and potentially lose money? Does buying a property now move me closer to my life goals? Do I really want to buy now or am I just feeling a lot of pressure to just buy something? Am I holding back because I'm scared property prices might drop soon? There’s no doubt that buying a home can be stressful, but it doesn’t have to be. Having a plan in place is the best course of action to help you make good decisions and alleviate that stress. If you’d like to have a conversation to discuss your plans, ask some questions, and map out what buying a home looks like for you, we can address many of the unknowns together. The best place to start is to work through a mortgage pre-approval. There is no cost for this service, you’ll learn exactly what you can qualify for, and it will provide a lot of clarity about your situation. You might decide that it’s best to wait before buying, and that’s just fine. You might find that now’s a perfect time for you to buy! If you'd like to talk, please connect anytime. You’re not in this alone. We can work through everything together.

Improving Your Credit Score

By Luisa Hough • February 5, 2025
Your credit score and how you manage credit are huge factors in qualifying for a mortgage. If you want the best interest rates and mortgage products available on the market, you want a high credit score. Here are a few things you can do to improve your credit score. Make all your payments on time. Making your payments on time is so important; in fact, it might just be the most important factor in managing your credit. Here's how credit works. When you borrow money from a lender, you agree to make payments with interest on a set schedule until the debt is repaid in full. Good credit is established and maintained by making your payments on time. However, If you break the terms of that schedule by not making your payments, the lender will report the missed payments to the credit reporting agencies, and your credit score suffers. It’s that simple. The more payments you miss, the lower your score will be. 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If you already have at least two different trade lines, you shouldn’t acquire new trade lines just for the sake of it. Of course, if you need to borrow money, like to purchase a vehicle to commute to work, go ahead and apply. Just remember: having more credit available to you doesn’t really help your credit score. In fact, each time a potential lender looks at your credit report, it may lower your credit score a little bit. With that said, if you already have two different trade lines and your lender offers you an increase on your limit, take it. A credit card with a $10k limit is better for you than a credit card with a $2k limit because how much you spend compared to your credit card's limit impacts your credit score. This leads us directly into the next point. Keep a reasonable balance. The more credit you use compared to the limit you have, the less creditworthy you appear. It’s better to carry a reasonable balance (15-25% of the card’s limit) and pay it off each month than to max out your credit cards and just make the minimum payments. If you have to spend more than 25% of your card limit, try to remain under 60%. That shows good utilization. Paying down your credit cards every month and carrying a zero balance will undoubtedly improve your credit score. Check your credit report regularly. Did you know that roughly 20% of credit reports have misinformation on them? Mistakes happen all the time. Lenders misreport information, or people with the same names get merged reports. Any number of things could be inaccurate without you knowing about it. You might even have become a victim of fraud or identity theft. By checking your credit regularly, you can stay on top of everything and correct any errors promptly. Both of Canada's credit reporting agencies, Equifax and Transunion, have programs that, for a small fee, will monitor and update you on any changes made to your credit report. Handle collections immediately. When checking your credit report for accuracy, if you happen to find a collection has been registered against you, deal with it immediately. It could be a closed-out cell phone account with a small balance owing, a final utility bill that got missed, unpaid parking tickets, wage garnishments, or spousal support payments. Regardless of what it is, it will harm your credit score if it's registered on your credit report. The best plan of action is to handle any collections or delinquent accounts as soon as possible. Use your credit card. If you have acquired credit cards to build your credit score, but you rarely use them, there is a chance the lender might not report your usage, and that won’t help your credit score. You'll want to make sure that you use your credit at least once every three months. Many people find success using their credit cards for gas and groceries and paying off the outstanding balance each month. There you have it. Regardless of what your credit looks like now, you will continue to increase your credit score if you follow the points outlined above. If you're looking to buy a property and you’d like to work through your credit report in detail, let’s put together a plan to get you qualified for a mortgage. Get in touch anytime; it would be a pleasure to work with you!

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