Managing UK debt from Canada
 

Hi,

We are saving and paying off our debts like mad in advance of our hopeful move to Toronto in September 2011 (we'll be activating our PR visas in December).

I've just updated the spreadsheet and it looks like we will have around £8k of debt left on leaving date (not bad when we started at £37k!)

My question is, do the experts think that it is possible to manage this debt (on minimum payments) from Canada? I estimate that the monthly payments would be about £150 per month.

We hope to be earning $150k plus in Toronto.....

Any suggestions/advice would be greatly appreciated!

Thank you in advance!

Re: Managing UK debt from Canada
 

Yes, of course it is. If you actually want to pay it off though, pay more than the minimum.

Re: Managing UK debt from Canada
 

Hi FS!

Don't know what your outgoings would be on housing etc, but that's a comfortable salary to live on in Toronto even with the £150 monthly payments (in my view).

Good luck landing. Get in touch if you need anything.

M :D

Re: Managing UK debt from Canada
 

If you hit the right jobs it's a good idea to pay it off from Canada with the dollar still very strong.

Re: Managing UK debt from Canada
 

Any advice on the practicality of making payments to the UK?

Re: Managing UK debt from Canada
 

All of the major currency dealers will allow you to set up regular payments. For ease I would try to consolidate all your debt to one source then you only need 1 transfer per month. The other option is to keep a uk bank account open and top it up on a regular basis from Canada.

Re: Managing UK debt from Canada
 

Thanks!

Is it easy to do regular transfers from Canadian account to UK account? WHat kind of charge would be levied at both ends?

Re: Managing UK debt from Canada
 

Costs depend upon who you bank with and what type of account you have. Some accounts in Canada give you free transactions others will charge or limit the number of transactions. If you use someone like Hifx or Moneycorp, they do not charge a fee for fund transfer, however there will be a minimum amount they will transfer. Hifx do have an online self service option for amounts up to £70k. I can remember what the minimum is. You will probably be charged by Canadian bank for fx transfers

Re: Managing UK debt from Canada
 

I use xe.com (as do many on BE). For lower-amount transfers I save money by having them create a bankers draft and mail it to the UK for me (very easy on their website). It's a little slower but there are no fees and a better rate than from my bank. You might wish to have all your debt payments made via direct debit from your UK current account (if you don't already) and then top up that account every couple of months with a bankers draft (or more expensive but quicker electronic payment) from the likes of xe.com or Hifx. This is a neat, clean way of doing it and no need to perform any kind of debt consolidation.

If you do go down the debt consolidation road then look at this carefully as you can end up paying a lot more in interest over the life of the debt if you're not careful (I used to work in a bank and consolidate people's debts all the time - some did it because they wanted to and some did it because they had to - but it was always 50/50 whether they ended up saving money or spending more overall).

Re: Managing UK debt from Canada
 

Thanks Tonrob.

Is this the site you use? http://www.xe.com/fx/ I'm not really sure how it works.

We would need bank account in UK and Canada, right?

The plan is to have the rest of our debt on 2 credit cards (max) and make just above the minimum payments until they are cleared (4 years!!!) although obviously if we have spare cash we would put it towards this debt too.

Re: Managing UK debt from Canada
 

I would set up a line of credit in Canada and use that to pay off the UK debts. The exchange rate will be in your favour as, currently, are interest rates. It has the benefit of you being able to decide how much each month you wish to pay off (over the minimum), which may be beneficial in the first few months until you know what your outgoings are.

Re: Managing UK debt from Canada
 

I was under the impression that new immigrants wouldn't have any credit history in Canada, and therefore that wouldn't be an option.

Any advice to the contrary gratefully received as this would be the ideal solution!

Re: Managing UK debt from Canada
 

The same applies to line of credit as applies to a mortgage. If the bank is prepared to lend you, say, $250,000 for a mortgage, but you only require $200,000, they will usually be prepared to provide you with a $50,000 line of credit. So, as with most things, it depends.

Re: Managing UK debt from Canada
 

Unless you have a low interest CC (6% or less) get rid of those CC with exorbitant interest rates. As CC said, a mortgage with LOC would likley be best. A mortgage is the lowest cost source of financing around. If the loan is secured most lender would go for it. Unsecured would be another issue and more problematic. Also, the more credit you can get and pay off, the more it contributes to credit rating. A line of credit, secured is in the region of 4-5% interest and can be paid off anytime without penalty. The down side, it is repayable on demand.

Re: Managing UK debt from Canada
 

We are in the same position and are making sure we always have the debt on a 0% card. If you have the card moved to a family address and have your bank account (UK) registered there you can pay via internet banking (UK bank) when you bills come. JUst have a family member to open the bill and tell you how much to pay. Many credit card companies allow for online accounts so you can pay it off that way as well.

We are due to land in feb11 and move in aug11. Hope to be earning a decent income as well buty bare in mind you may have to take a few drops in what you earn in the UK because of the lack of Canadian experience.