TORONTO, June 2, 2014 /CNW/ – The majority of Canadian adults (61 per cent) don’t know what options are available to them if they can’t pay their mortgage, according to a survey of 1,500 Canadians released today by Lawyers’ Professional Indemnity Company (LAWPRO)®. Another key survey finding –79 per cent of Canadians currently own or have considered purchasing property – paints the picture of a nation that values home ownership, but lacks the mortgage literacy necessary to safeguard their biggest asset.
“Arming yourself with knowledge is key,” says Ray Leclair, Vice President, Public Affairs at LawPRO. “If you’re experiencing financial difficulties, you don’t have to go to your lender alone and unprepared. Speaking with a lawyer is an investment in learning your rights and obligations regarding a mortgage you can’t pay. An experienced real estate lawyer can also help you find solutions and strategize how to protect your most significant asset.”
While most Canadianswant to be debt free, those carrying mortgages feel more comfortable owingmoney than previous generations, according to a survey.
But that may have something to do with how they define being debt-free, which varies by age, the survey by Manulife Bank of Canada found.
Nearly 70 per cent of respondents in their 20s said they could have an outstanding mortgage and still be debt free, compared to just 29 per cent of respondents in their 50s.
The survey also found that nearly 40 per cent of home owners feel more comfortable with debt than their parents with the views differing by generation. Those in their 50s were five times as likely as those in their 20s to feel more comfortable with debt than their parents.
When it comes to money decisions, it can be hard to figure out the right thing to do. Money is about power, emotion, morality, and security, among other things. So in this space, we gather personal finance luminaries to weigh in on a financial quandary.
This week’s question: Should you give your child a down payment to buy a house?
Kevin O’Leary, author of Cold Hard Truth on Family, Kids & Money: Giving your child a down payment for a house is an incredibly bad idea. Invariably, your “gift” will be like the first taste of a drug — and before you know it, your son or daughter will be a full-fledged debt addict.
Your down payment in most cases assumes that they will be taking on a mortgage for the rest of the home’s value. This may be on top of the student loan they already have, plunging them further into debt. Many people make the assumption that buying a house with mortgage debt is always a good idea because the home value will appreciate over time. This assumption made sense over the last 25 years, as rates did nothing except go down. The direction of real estate’s value during periods of rising rates is far less certain. My bet is that home values will be stagnant over the next five to seven years, which is the average time that people own a home. That is because interest rates are likely to rise over the same period.
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