What do you think about when the warm weather arrives? Home renovations, garden projects or summer vacations? Often times we know exactly what we want to accomplish, but we aren’t always sure where the money will come from.
If you are planning for a large expense for this summer, or indeed for any time of the year, here are a few areas you may wish to consider.
Don’t pull out the Visa without planning to repay by statement date. Most credit cards charge 18-20% and count on you failing to plan for purchases and making monthly payments. It makes sense to consolidate for a much lower rate, perhaps as little as 5.50% - 6%, depending on your credit history and current financial situation. If a move like this could help free up money you need for other things, a visit to your loan officer or mortgage broker may be in order.
Property values have increased substantially in recent years, and many people are taking advantage of their new found equity to do those home renovations or take that put off vacation, buy a new vehicle, consolidate their debt and many other uses that wouldn’t necessarily be a cost conscious choice in higher interest markets. The equity in your property is the current market value less any mortgages or property secured loans or lines of credit. You are able to borrow up to 75% of the market value of your property without paying any premiums for insurance or high ratio lending. This latter figure minus the previous figure you calculated is the amount that you can borrow with conventional financing. Whether or not you qualify to borrow this amount is dependent upon your credit and debt load.
If you’d like to set aside funds for an upcoming expense, there are a number of specialized, higher-interest savings vehicles that may meet your needs. These are conservative options that pay higher rates than bank account but are still suitable for the short-term investor. Premium high savings that currently pays 3.25% monthly, cashable or flexible GICs that pay 3.65% or 30-90 day GICs that pay 3.75% –4.02%. If you think rates are on the way up, keep rolling over a 30-day GIC at 3.75% instead of letting the money sit in a low interest account.
Don’t let the summer pass you by, If there are things you’d like to accomplish before the snow falls, now is the time to start the ball rolling.