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Hurdles to Becoming Mortgage Free

According to new stats from the Leger Marketing survey that was done for CIBC, it is taking people longer to reach that magical mortgage free celebration. On average people are not becoming mortgage free until the ripe old age of 57 (my apologies to our more experienced/older readers), which is 2 years older than the survey found just last year. In a recent BMO survey they also found that over 50% of Canadians expect to have a mortgage after retirement.

A stat in the Leger survey gives us a major clue into solving the problem. The survey found that an alarming 50% of Canadians added non-mortgage debt after they bought their last home.

I see two major issues here, the first being a lack of planning. If 50% of Canadians are adding very expensive non-mortgage debt after they just made a home purchase, then they likely didn’t receive very good coaching prior to their purchase. Granted there can be surprises, but if you build in a contingency fund that allows for these expenses, you won’t end up putting it on your credit card at 17% interest.

Creating a realistic budget with allowances for those unexpected surprises, and utilizing products like purchase plus improvements, or a cash back mortgage with me, your mortgage broker, you can avoid expensive non-mortgage debt. Both products are offered by many lenders, but get very limited use since qualify rules and requirements are insane.

The other major issue is our need for instant gratification, “I want it now” and “we have room on the Visa, so I’m buying it”. The problem is most people are not aware what the actual cost is, including interest, and if they were, I think many would choose to wait or at least consider other options. Again, this is where we as mortgage professionals can step in and show people like yourself, the numbers so you can make better and more informed decisions. If that 60 inch flat screen is actually costing me double the sticker price, I may decide to wait?

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