How to Work Debt to Your Advantage
No one wants to be in debt, but itís just another part of life Ė like root canals and taxes!
No one wants to be in debt, but itís just another part of life Ė like root canals and taxes! The thing you need to figure out is that while itís good to pay cash if you ever want to buy a home, a car or any other big ticket item youíre going to have to be able to get credit; if you want to be able to get credit youíre going to need to be able to have a proven history of repaying your debts. Here weíre going to explain debt in clear cut terms and how you can work it to your advantage, so letís get started!
Avoid Bad Debt
You donít want to get stuck with bad debt Ė high interest credit cards and using your credit to buy stuff like fast food and cheap shoes are good examples of depreciating goods that you just donít want to waste your credit on.
A Note on Payday Loans
If youíre new to borrowing and want to get your feet wet, these fringe options might seem AWESOME to you. Theyíre not, and theyíre designed to take all of your money and leave you with nothing. Things like payday loans, rent to own places and more will give you substandard goods and service with high interest rates and many lenders down the road might actually take a dim view of fringe banking.
Get Good Debt
There is such a thing as good debt, and without it youíll never get a good mortgage. Paying your debts on time, getting a secured loan on a car and a bunch of other things can be the best way to save. You will want to avoid things like pay day loans, wasting credit on frivolous things you can easily buy with cash or a debit card. Using your credit wisely now will help you later when itís time to start looking at mortgages and other major financing. Donít get stuck with something that doesnít work with you Ė make your credit work FOR you.
Secured Debt is Good Debt
If you really want to get mortgage for the self employed, you need to learn how to used secured debt to work your way up to a mortgage. Some secured debt can be scary, because it canít be discharged in bankruptcy. Youíll see common forms of this with a secured credit card, secured lines of credit like HELOCs and home equity loans. Whatever you do, you need to know that each purchase and each payment are building towards a future.
Everyone uses credit differently, but if you want to get a mortgage down the road, guard your credit now. Keep on top of your payments, avoid quick fix solutions that will only look really bad for you in the future. Research all of your options for financing, and be as liquid as you can be at all times.
Homebase Mortgages is a leading Toronto mortgage broker, which specializes in all types of mortgages ranging from home equity loans, second mortgages, private mortgages, mortgage refinancing, mortgage renewals, home mortgages and hard money lending.
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