No Transfer Fee No Interest Cards

Savvy = savings for home buyers

Buying a home is a big financial decision -- probably the biggest you'll ever make. To get you started on the right financial foot, here are some basic tips.

Be cost savvy:

Monthly housing costs, including your mortgage principal payments plus interest, taxes, heating expenses and condominium fees (if applicable) should be no more than 32% of your household's gross monthly income.

Monthly debt load, including your monthly housing costs plus all other loans or required monthly payments for your car, credit cards and so on should not exceed 40%.

Extra expenses such as HST and other applicable provincial taxes, appraisal fees, property tax, survey fees, property insurance, land transfer tax, legal fees, service charges, inspection fees, mortgage loan insurance premium and application fee, moving costs and any immediate renovation or repair expenses can add significantly to the base cost of your new home.

Be mortgage savvy:

The term of the mortgage, interest rate, amortization period and payment frequency all have a direct impact on the size of your monthly payment. It's usually more financially beneficial to choose a shorter amortization period along with the flexibility to increase your overall payment frequency (from monthly to bi-weekly) or to make yearly lump sum payments without penalty.

The down payment requirement to avoid added insurance costs is 20% of the cost of your home -- but the larger your down payment, the lower your monthly mortgage payment will be, and the greater the savings on interest paid.

Be financing options savvy:

If you're buying for the first time, you can take advantage of the home buyers plan (HBP) that allows you to withdraw up to $25,000 from your RRSP without immediate tax to use as a down payment or for other home expenses.

If there are joint applicants, each can withdraw $25,000 - but each withdrawal must be repaid in annual installments within 15 years to avoid tax on their full amount (and you'll lose all the tax-deferred, compound growth potential on your withdrawals, which could put a significant dent in your retirement income). Alternatively, you could help to fund your purchase with a tax-free savings plan (TFSA) withdrawal. There are no first-time homebuyer restrictions, no dollar limits, no tax issues, and your RRSP stays intact. As well, you can re-contribute amounts withdrawn from the TFSA starting in the year following the year of withdrawal.

Balance Transfer Cards Explained | No Annual Fee Credit Cards

Balance transfer cards are available from most banks as a way to lure customers to their product.

They can be a bit confusing to understand and many customers wind up falling into a debt trap because they do not understand exactly how they work. They work by simply moving your balance from one card that has a high interest rate over to a new card with a lower interest rate. This process reduces the amount that it will cost for you to pay off your debt. Whilst it sounds pretty straightforward, you would be surprised to find out how many customers wind up in a debt trap with these cards.

Balance transfer credit cards are a great way to get out of deep card debt. Typically, the interest rate on most cards is fifteen to twenty percent. Imagine how much money you would save if you were to reduce that rate to zero percent for a few months. That would give you more money in your pocket to put toward clearing out the debt which would allow you to pay it off in full long before you could have without making the transfer. It basically gives you an interest reprieve so that you can focus on chipping away at the actual principle instead of using the bulk of your payment toward interest and fees.

As you would expect, there are some drawbacks to using these cards. The main issue is the allocation of payments clause that most credit cards operate under. This allows the card issuer to use all of your payment toward the debt that has the lowest interest rate first. In most cases, any purchases that you make will have a higher interest rate so they will not be paid until the full amount that you transferred is cleared off. This could put you right back into debt even while you are clearing out your old debt. The best bet is to avoid using this card for purchases until after the transfer is paid off.

If you are looking for a balance transfer card, you will need to find the offer that is best for you. This means figuring out how much time you will need to pay off your bill and finding an offer that fits into that time table. You should also look at the ongoing interest rate to make sure you are getting a card that will be valuable even after your debt is paid off.

No Annual Fee Credit Card is a financial comparison website, it has no affiliation with Australian Banks. We make an effort to keep up to date with all materials posted on this website, however there can be a delay between us and the banks. Best Credit Cards only represents a limited group of credit cards that are currently accessible by the Australian Market. The term 'best' is by no means a representation of the best card in the australian credit card market. It may not represent the best choice for your individual circumstances. It is always advised that you seek consultation from your own financial advisor before making a decision.