Date Posted: September 5, 2017
With fewer national delinquencies on mortgages being at record lows, some Canadians are struggling to payoff other household debt in order to stay on top of their mortgage payments. They'll rely on high-interest credit, such as credit cards to bridge that gap.
Statistics Canada reports that for every dollar of disposable income the average Canadian has, they owe almost $1.70 in consumer debt, mortgages and other loans. This has climbed significantly from the early 1990's, where Canadians owed less than $0.90 for every dollar in disposable income.
This has caused economists to warn Canadians that any change affecting their personal finances can be cause for concern. Job loss, income drops or higher interest rates can put immense pressure on your household expenses.
The main concern are credit cards. Credit cards are typically at the bottom of the hierarchy of payments in borrowers' minds, and that can snowball into large amounts of credit card debt.
With today's technology, Banks and credit card issuers have the means to contact you electronically, preventing borrowers from coming up with excuses of not receiving hard-copy mail or missing phone calls. Missing payments will leave a black mark on your credit report, something which mortgage lenders review closely before considering you for a mortgage loan.
When looking at purchasing a house, whether you are a first time homebuyer, or a seasoned owner - purchasing an affordable home is the key to ensure you will be financially prepared for the future. Too many Canadians let their emotions take over and end up buying a home which has forced their affordability ratios to be stretched thin.
Speaking with a mortgage broker and obtaining a pre-approval prior to your start of seeking out a home can help prevent you from ending up "house poor". A mortgage broker can help you set up a budget which can help you navigate the uncertainty of the future.