What to Do Before Applying for a Mortgage

Buying a home is a momentous occasion for most people. However, doing so almost always requires a mortgage. Applying for a mortgage loan and having your application approved is often more stressful and challenging than the home buying process itself. With that said, being prepared for what’s in store can put you in a position where these difficulties are minimized.

Consider the following before deciding to apply for a mortgage:

Compare lenders

It’s important to do your homework regarding various lenders. Application requirements, interest rates, loan type, and approval parameters vary from one lender to another. Consider using a web capture tool to document this information as you come across it online. Once you’ve given all the potential options a look, consult these captures to compare notes. Viewing the differences side-by-side will make it easier to determine which lenders are the best choice for your situation.

Improve your credit score

Once you’ve narrowed down the list of best mortgage options available, it’s time to devise a six-month gameplan for getting yourself into the best financial position possible for approval. This almost always requires an effort to improve your credit score. Do so by taking steps to rein in your credit utilization while continuing to demonstrate responsible credit usage. Check your credit report to spot errors that negatively affect your score and take steps to have them corrected. All of this should be done prior to your mortgage application.

Know the 28/36 rule

Most lenders rely on what’s known as the 28/36 rule when determining whether or not a mortgage applicant qualifies for loan approval. The mortgage payment must be no more than 28% of your gross monthly income, while your total debt obligations (including the mortgage payment) can’t exceed 36% of your gross monthly income. These include car payments, student loans, and credit cards. Do the math to determine whether or not your financial situation fits into these parameters before you decide to apply for a mortgage.

Gather the right documents

Lenders want to get to know as much about your financial situation as possible. This usually includes pay stubs, tax filings, and bank statements. While it varies from one lender to another, they typically want to see a month’s worth of paycheck stubs, two years of tax filings, and three months of bank statements. Have all this information readily available before applying.

Pay down debt

Chances are you’re at or over the 36% benchmark mentioned above. You want to lower that figure as much as possible before applying for a mortgage. The simplest way to do so is to pay off as much debt as possible. It’s easier said than done, but the truth is that a high volume of debt obligation will make it difficult to afford a monthly mortgage payment. It’s in your best interest to lower your monthly debt obligations as much as possible, in order to be in a better position to manage the financial situation being a homeowner will bring.

Don’t make any major purchases

Last but not least, you want to hold off on any major purchases before and after applying for a mortgage. In fact, it’s imperative to resist doing so even after you’ve been approved; lenders will continue to monitor your financial situation and have every right to rescind their agreement if they discover you’ve increased your debt obligation by racking up credit card debt.

Being approved for a mortgage is more difficult than ever before, but for good reason. Lenders need to make sure borrowers are in a position to fulfill their end of the arrangement. This requires a lot of paperwork and financial maneuvering, but the ends justify the means. Being prepared is key to being approved.

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Your Simple Guide to Payday Loans in Canada

What is a Payday Loan?

A payday loan is a short term loan used to cover immediate or unexpected expenses and is typically offered to people with a stable source of income. The idea is to get the loan as soon as you want it, before your payday, and pay it back on your next payday. Getting a loan for more than 30 days could depend on your arrangements with the payday lender. The amount to borrow also differs but the average payday loan in Canada is about $280, although you could request for up to $1,500. Failure to pay back this loan on the agreed date could result in more fees and interest charges that would increase your debt.

What to Expect When You Take a Payday Loan


Before applying for a payday loan, ensure you meet the following requirements:

  • At least 18 years of age
  • A government-issued ID or a social security number
  • A stable source of income
  • An active bank account
  • A permanent address

Requests from the payday lender:

  • A form to allow the lender to withdraw the exact loan amount from your bank account, including fees and interests.
  • A post-dated cheque for the total loan amount.
  • An agreement from the lender that contains all the details for you to sign.

Are Payday Loans a Better Option?

There are a lot of arguments surrounding whether payday loans are safe or not. While advocates argue with the fact that it helps people with poor or no credit scores, others object with the fact that it traps people into debt. However, it depends on perspective and how the loan is being managed. 

A payday loan is meant to cover up for unexpected costs and not for things that can be avoided or kept for later. Payday loans are easier to access and have fewer requirements compared to bank loans and other kinds of loans. You also do not have to worry about your credit score and it is not in any way secured by personal property, so you can worry less about losing your property. 

To be on the safe side and ensure you don’t run into debt from taking payday loans, you can review the free financial education materials from the Canadian Payday Loan Association. Also, ensure you pay the loan off on the due date to avoid further costs. 

Risks of a Payday Loan

While payday loans are easier to get, the fees and interest rates are much higher than banks, credit unions, and credit cards. Exceeding the payment deadline would incur a higher rate, as the lender could add late fee charges and interest for the days post-deadline. The lender could also contact a collection agency, of which an action from them could affect your credit score. It could also lead to a court sitting.


While there are so many platforms and agencies available to lend you money, you have to be careful with the one you affiliate yourself with. A little mistake in your payday loans could keep you in unexpected debt. Accessing payday loans in Canada, for example, is an easy and fast way to go about it. While no platform can guarantee 100% security, signing up with the best-recommended ones would reduce security risks and save you from incurred debts. 

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Raising a Financially Responsible Adult

Managing money is tough for a lot of people. The majority of adults have a hard time saving, spending carefully, and investing in themselves. This is probably because we don’t learn financial skills much in school, and use them every day in real life. It is vital knowledge for everyone, which is why parents should be doing their best to raise financially competent and responsible young adults. There are a few things you should be doing to rear the most financially savvy kid you can, here are a few of them.

Include your Kids in Financial Decisions

One of the most important things you can do is actually pretty simple—involve them in your own financial choices. This can begin very young and ingrain them with a sense of importance when it comes to financial decisions. Discussing these issues is uncomfortable for many parents but it teaches your children fundamental things. For example, it will help learn how to save, spend responsibly, borrow, and invest. Using everyday situations will provide a practical element to these lessons. Not only will it facilitate their growth in regards to finances, speaking you with about it will strengthen their communication skills.

Encourage Financial Communication

As it turns out, hiding the details of finances isn’t really good for anyone, whether you are bringing home the bacon or simply eating it. When you teach your kids financial communication skills, they will have them forever. It is key to engaging their interest in finances, it enables them to make better choices by both asking for help and receiving advice.

Give them a Prepaid Debit Card

Giving your young teen a card loaded with funds that they can spend is a great avenue to teach financial independence. This is a great way to make sure your kids have spending money while enabling to learn about saving, investing in their future, and more.

Your teen will not be able to spend what they don’t have. You can use the card as a way to show them that they only have a certain amount of money left. By loading money for allowance, school supplies, food, and more, your kids can learn how to conserve.

It is important to be tough and refrain from giving them extra money after they run out. You are teaching lessons with the card, not giving them a personal credit line. Another helpful aspect of these debit cards is that it will show them how to take out money and therefore understand the interplay between cash, debit, and credit. 

Help them Open a Savings Account

A great way to show your kids how to be financially responsible is to make an event out of opening a savings account. It is essential that even before the teen opens their own checking account that they have a savings account where they put a portion of their money. Tell them that they always need to a percentage away and that the rest is for spending. By encouraging these good habits, you will foster a financially savvy young person in no time.

Show them How to Invest

Intelligently investing is another step when you feel that your child has a grasp on the basics of saving and spending. Showing them that there are intelligent ways to keep your money safe and growing will spark an interest in them. Everyone likes to gain money, and teaching your children these sometimes boring but useful ideas can make all the difference in the world.

Help them Automate their Finances

Getting organized is so integral in every aspect of life, but especially with money. Using apps and other services, you can show them how to allocate money in order to pay bills, save, invest, and, lastly, to spend. With the tools of modernity at your disposal, your child can learn independence and responsibility by engaging with numbers and emotion-less reasoning. When you are able to see what a computer will do with your money, you can learn the ways of intelligent financials.

There is no single method to teach your kids financial responsibility, but by putting in the effort and using comprehensive tools and methods, you’ll show them that it is not only possible to live financially independent, it is necessary to live a happy, stress-free life.

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