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Best Vacation Ever – How To Pay For Vacation

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HOW TO PAY FOR VACATION / THE AVERAGE BC FAMILY SPEND ON VACATION.

How to pay for vacation or payoff your vacation loan?

Now that we are into the Canada Day Long Weekend, here is a blog that might help someone you know or perhaps you’re considering how to pay for much needed vacation expenses.  We all either know someone or have done it ourselves; borrowed too much or extended our budget too far in search of that dream vacation.

THE WRONG & RIGHT WAY TO PAY FOR YOUR NEXT VACATION

WRONG:

I have no money should I put the trip on my credit card?

Credit cards come with a high rate of interest and amortized over a short period of time. Charging a vacation to a credit card can have devastating impacts on your finances when you return. As well trying to refinance that debt at the end of your vacation is a reactive measure, try being proactive. If your vacation costs affect your ability to maintain a good credit rating and you are a home owner this could dramatically affect your ability to refinance your mortgage or even renew.

RIGHT:

Apply for a Line Of Credit, Home Equity Loan or a Personal Loan prior to leaving.

By applying for a vacation loan prior to your dream vacation you will have a better sense of your monthly obligation prior to leaving. If you don’t have a plan for success you run the risk of damaging your credit rating by over extending yourself. This may lead to a bad credit rating and make it harder & more costly to qualify for loans with bad credit.

BEST WAY:

Planning and budgeting all the money for that much needed vacation is by far the best way to enjoy that dream vacation. If you are paying for all or the majority of that summer or winter vacation prior to leaving you run little to no chance of falling into financial hardship.

How Much Home Equity Loan VancouverWHAT DOES THE AVERAGE CANADIAN SPEND ON A VACATION EACH YEAR

This is really a personal decision that depends greatly on your fixed living costs, lifestyle choices and the cost of living across Canada. If you value seeing the world over having higher net worth in housing, cars, higher education, money left over for family then adjustments will be made so that you have larger sums set aside for travel.

Some reports state the average family will spend on vacation 5 – 10% of their gross annual income each year. That works out to either side of 1 months’ pay. So a family with a combined annual income of $80,000 will spend on average $4,000 to $8,000 per year on vacation. This could be one big trip to a sunny destination or split up between camping and traveling depending on the amount of time off you can afford. If you are self employed you must consider that you may not be earning money while you are away and adjustments will need to be made to compensate for this.

How To Afford A VacationHOW DO YOU AFFORD A VACATION IF YOU LIVE IN VANCOUVER

That is the million dollar question; with housing costs in Vancouver BC, the highest in Canada, the average detached home price $1.36-million and average rent in Metro Vancouver at $1,005 for a one bedroom and $1,281 for a two bedroom. Couple that with the BC average weekly wage of $873.14 = $45,403.28 annually. This comes down to a life style choice for many Vancouverites. Maybe you go on less than the national average due to you living in a city that offers so much to do. Or maybe you go on one big trip every two years.

WHAT DO YOU DO TO FIND VACATION MONEY?

  • Put it on credit & make payments
  • Live in a smaller home
  • Rent in a less expensive neighborhood
  • Only have 1 car
  • No Car
  • Walk to work
  • Have family flip the bill
  • Only go on vacation once a year
  • Don’t dine out
  • Live a simple life
  • Don’t have children

Vacation ListsGUIDELINES THAT MAY HELP YOU PLAN – HOW TO PAY FOR VACATION

Airline Tickets: Cost of airline tickets are on of the largest expenses in traveling.

Hotel Prices: A hotel across from the water is a great way to save big on your next vacation.

Food & Alcohol: All inclusive options can bring down the costs of food & alcohol.

Entertainment: Water activities nightlife and tours are all costs that can add to the cost of your next vacation.

Pets: If you are taking your pet or leaving it behind there can be an extra cost.

Medical: Additional medical coverage for vacations outside of Canada is a must.

Transportation: Cabs, buses even rental cars can quickly add up. Plan on what you are doing and how you are doing it.

Souvenirs: Purchasing and in some cases shipping those gifts home come with an added cost.

 

Why Pay Property Taxes In British Columbia Canada

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Why Pay Property TaxesWhy Pay Property Taxes? Well your property tax payment is one of the largest revenue sources in the Province of BC. These taxes are critical in helping provide programs & services in communities throughout British Columbia.

If you own or lease property or manufactured homes property taxes must be paid yearly for each property type in BC.

List Of Services Property Tax Dollars Fund In British Columbia:

  • Hospitals
  • Libraries
  • Recreation & community centers
  • Road construction & maintenance
  • Police & fire protection
  • Schools
  • Parks
  • Garbage services
  • Emergency Rescue Services

How much property tax you pay is determined by a Tax Rate & property assessment which is set to share the cost of providing these services.

When are your property taxes due? Check out the link 

Why Claim Your Home Owners Grant BCWhy Claiming Your Home Owners Grant?

You or your spouse can only claim the home owners grant against your principal residence each year. However if you are married had have a written separation agreement with your spouse at the time you apply you can both claim the grant for separate principal residences.

A home owner’s grant is available to residents that pay property taxes to a municipality or province. For First Nation property taxes contact the First Nation directly.

How To Defer Your Taxes

If you are 55 years or older you may qualify to deferring your property taxes.  

What Happens If You Don’t Pay Your Property Taxes

If payment for property taxes is missed by the date specified you will be charged a 5% penalty on your unpaid balance.

For balances remaining by 31 December each year you will be charged interest on the outstanding amount of 7%

What Happens If You Are 3 Years Behind On Property Taxes?

Each city or town holds and auction each year called the tax sale.  Properties with 3 years of tax arrears can be bid. The current owners have one year after the tax sale to redeem the property or the process of transferring the property ownership starts.

To learn more about Tax Sale of homes in Vancouver.

 

Mortgage Lender BC – How To Become A Lender

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How To Become A Private Mortgage Lender:

Crystal Ball Of Finance

Crystal Ball Of Finance

Private mortgage lending can be a very lucrative investing tool for the average person to add to their portfolio. In BC private money lending on real estate is pretty basic. In general the average investment will go up to 75% LTV or Loan to Value. Higher LTV’s do happen up to 80% but for these examples we will use 75%.

 

This means if the client has a home valued at $500,000

1st Mortgage of $325,000

  • $50,000 in debts or other bills
  • Client can borrow up to $50,000 or 75% of the value of their home
  • 75% x $500,000 = $375,000 – $325,000= $50,000
  • Regardless of credit or income

The primary philosophy is that not everyone’s income or situations is the same and by allowing people to access funds in a nontraditional manner (i.e. Not using TDS & GDS ratio as well as verifiable income) enables clients to meet their goals as well as the investor to be paid very well for their assistance.

 

 

servicesGeneral information that helps determine risk & rate:

  • Appraisal Reports or BC Assessments on lower LTV homes can be a good indicator for value
  • These are stated income products so in most cases NOA’s or Job Letters are not required
  • If BFS an online listing or website to see if the business exists or if salaried average income indicator for the industry type.
  • Credit Bureau is one of the best indicators of a client’s ability to pay. (Low or high credit score is not always the true indicator). Rather look at the history over several years. Many times you can look at the credit report and see one particularly month or year that has been the major starting point. Generally there has been an incident that has caused a domino effect in credit delinquency.  People generally want to pay for their home more so than credit cards & other loans
  • What size is the 1st mortgage? Large 1st mortgages can be a risk for investors. In a worst case scenario if it goes into a foreclosure and you have to buy out the 1st mortgage do you qualify to do this?
  • BFS clients (Do they owe GST or Payroll Taxes) some government taxes can be applied to a clients personal home and in some cases they can be put into 1st position.
  • Strata Units can have issues due to special assessments or levies.
  • Small Town / recreational lending can have issues due to demand & length of time it takes to sell

servicesGeneral Terms for Private Mortgages:

Primarily private mortgage terms are written for 1 year with interest only payments. The reason being is it gives the client an opportunity to correct their credit or income situation in hopes they will be able to refinance after that one year term. If not it is the option of the lender to offer a renewal and generally lenders will if the payments and terms of the agreement have been met.

For the private mortgage lender the 1 year term allows them to judge market conditions to verify if property taxes have been paid & fire insurance is up to date prior to offering a renewal.

Best 2nd Mortgage RateWhy are property taxes so important to keep up to date in private mortgage lending?

It is important to keep property taxes current because once you miss 3 years of paying property taxes the home can be put up for tax sale.

Best 2nd Mortgage RateWhy is fire Insurance Important to keep up to date in private mortgage lending?

If the fire insurance policy elapses on the property and there is a claim against the home there is no insurance to pay for the loss and this could significantly impact the security of a private mortgage.

rental income iconCosts for arranging private mortgages

Generally the cost for arranging a private mortgage is passed onto the borrower.

Average list of Costs:

  • Legal Fees
  • Broker Fees
  • Lender Fees
  • Title Insurance
  • Fire Insurance Binder
  • ILA Independent Legal Advice
  • Appraisal fees / inspection fee

Most of these costs can be added to the mortgage amount and paid out of proceeds. An appraisal fee generally will be an up front cost due to this is one of the factors that need to be determined ahead of arranging terms & rate.

servicesBest Rate’s of Interest on private mortgage financing.

Each file will have its own unique set of circumstances that will affect rate but generally speaking:

1st Mortgage under 50% LTV currently June 2014 start as low as 5.48%

2nd Mortgages under 50% LTV currently June 2014 start as low as 6.5%

These rates are area specific.

General Interest Rates for private mortgage financing

1st Mortgage rates 7.95% & up

2nd mortgages 8.25% & up

*Rates are subject to change based on variables in mortgage application.*