My advice • May 01, 2024
modified on July 31, 2024
Plan the financial aspect of your project
A key step!
Kévin Charbonneau D.Financial Planner at
Laurentian Bank
Planning a trip, major purchase or home renovation? Laurentian Bank financial planner Kévin Charbonneau D. recommends speaking with an advisor about your plans as early as possible. “Together, based on your project, timeline and financial situation, you can agree on a strategy that can combine savings, credit and financing” he says. We’ve prepared two scenarios which highlight the importance of planning to meet your goals.
1st scenario: Viviane's bike trip
Effortless saving
Many credit cards offer cash back of 1% to 3%. With annual transactions totalling about $20,000, Viviane could accumulate the equivalent of $100 to $300 over the next six months… followed by an additional $50 to $150 in cash back by paying all the expenses incurred during her trip with her credit card.
Choose the credit card that suits you best
Minimize interest
“The trip can be financed without paying any interest until the credit card statement due date, and then the entire balance paid off using a line of credit to transfer the debt to a product with a lower interest rate,” suggests Kévin Charbonneau D. “However, it is important to plan the repayment of the line of credit before it is used.”
Kévin Charbonneau D.
Meanwhile, Viviane’s TFSA, which she prefers to keep for emergencies, continues to earn interest.
2nd scenario: Charlie’s future kitchen
Adopt good saving habits
By setting up an automatic transfer of $75 per week to a Laurentian Bank High Interest Savings Account (HISA), Charlie ensures that he receives 3% interest1 risk-free. After two and a half years, this slight adjustment to his budget allows him to set aside more than $10,000.
Open a HISA with Laurentian Bank
Each time he reaches $500 of savings in his HISA, he could also re-invest it in Guaranteed Investment Certificates (GICs). Because his time horizon is 3 years, when his GIC reaches maturity, he may benefit from an even higher rate than the HISA.
Kévin Charbonneau D.
Financing to make up the difference
In the third year, six months before his project, Charlie could use the renewal of his mortgage to free up additional funds from the value of his property. “A Home Equity Line of Credit (HELOC) provides maximum flexibility. Withdrawals can be made as work on the project progresses and interest is only calculated on the amount of funds used,” explains the financial planner. In addition, since the property is used as collateral, the cost of borrowing is much lower than with a personal loan.
Alternatively, Charlie could apply for a second mortgage2 of $25,000. To qualify, however, the market value of the property must be at least 20% higher than the mortgage balance, either because of the repayments made or because the property appreciated.
Kévin Charbonneau D.
After two and a half years of saving $75 a week for his project, Charlie can now allot the same amount – or even a little more – to repaying his loan.
Learn about our Homeowner’s Kit
Your partner for project planning
As soon as the thought of a trip, renovation or any other project arises, speak to a Laurentian Bank advisor. Together, you can assess all possible solutions and agree on the best strategy for your goals. Teaming up with you to help you achieve your projects and ambitions – that’s what it means to see beyond numbers!
+ Legal Notices
- On any amount under $100,000.
Some conditions apply. Annual interest rates may change at any time. The current rate for balances under $100,000 in a HISA is 3.00%. Simple interest is calculated on the daily minimum balance and paid monthly. Laurentian Bank reserves the right to change the annual interest rate by posting a general notice in each of its branches and on the Current Rates page. - Some conditions apply.
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