How to avoid the financial misery that comes with too much mortgage
When lenders size you up for a mortgage, they analyze your ratio of debt to income, down payment, credit and so on, and most people get approved.
But not everyone gets approved for the mortgage they should get.
In many cases, by stretching their budget, folks land heftier mortgages than their wallets can bear. Burdensome mortgages not only make them house-poor but research shows the stress they cause might just shave years off a borrower’s life.
So, if you’re not keen on your mortgage hustling you to an early grave, consider these tips to trim it down to size.
One-third (33 per cent) of mortgagors surveyed by Mortgage Professionals Canada (MPC) say they regret taking on the size of mortgage they did. On a percentage basis, that’s 27 per cent more than 12 months before. And, for those renewing in the next year, the share with regret is 10 percentage points higher.
It does make one ponder why folks willingly dive into such mortgage misery.
One factor is needlessly exorbitant home prices. Many feel they don’t have a choice but to pay up. That reality is driven mainly by too much population growth and not enough home building. Credit for the population boom goes to the federal government, while the lack of building can be blamed on all levels of government.
The second reason is homebuyer expectations. People have blind faith that prices will keep climbing. In fact, 72 per cent of Canadians think prices will go up in the next 12 months, finds that MPC survey. And most, (58 per cent) say their purchase was at least partially motivated by their expectation of home appreciation.
Moreover, with rents at all-time highs, many homebuyers feel they must buy.
Yet, with a slowing economy, more homebuilding, pressure on politicians to
Read more on financialpost.com
