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Homeowner squeezed by credit

<strong>Q:</strong> Last December, I purchased a condo, but I didn’t anticipateall the costs of homeownership and used some other sources to close andfinance.

Q: Last December, I purchased a condo, but I didn’t anticipate all the costs of homeownership and used some other sources to close and finance.

In addition to my mortgage, I have three credit cards, two department store cards, and a line of credit.

Which should I?pay down first — the biggest loans, the mortgage or the other loans?

— Anna

A: Borrowers should pay down debts that carry the highest interest rates such as department store and credit cards.

If you receive a “Congratulations, we are increasing your credit limit” notice from your department store or credit card company, decline the increase.

Consolidate your debts by increasing lower-interest LOCs and pay off the cards. Then dispose of some cards, and keep no more than the number of hands — not fingers — you have.

More than 60 per cent of Canadians own their own home; it’s a worthwhile aspiration.

But many first-time buyers underestimate closing and monthly carrying costs.

For example, costs incurred on closing can include land transfer tax, appraisal fees, legal fees and disbursements, a portion of property taxes, utilities, new home warranties and so on. And recurring monthly expenses include mortgage payments, utilities, property taxes, maintenance fees, repairs, insurance and the like. So first-time buyers should be cognizant of all the costs associated with home ownership to avoid getting into debt and borrowing to finance recurring monthly expenses.

 
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