Canadian homeowners with a mortgage now say they won’t pay off their mortgages until age 57, says a new CIBC poll.
The average age has risen by two years since a similar 2012 poll was conducted. This is because non-mortgage debt is straining their budgets and repayment schedules, says the 2013 data.
Key poll findings include:
- Residents of BC had among the longest repayment expectations in Canada at age 59
- 50% of Canadian homeowners say their non-mortgage debts have increased since they first took on their mortgages
- These people are also less likely to be making lump sum payments to their mortgage, citing a lack of funds as the primary reason.
Most homeowners who have extra debt fail to make extra mortgage payments, with only 11% boosting their payments in the last twelve months. Also, less than 19% of those who haven’t build up more debt make lump-sum payments.
This is a problem because today’s low rates are a great opportunity for Canadians to drive their mortgage balance down. This advantage is lost if extra funds need to go towards repaying higher interest debt.
The survey recommends that you tell clients to consider mortgages with both a competitive rate and cash back up front. For new homebuyers, some banks offer products that provide 3% cash back, plus a 5-year fixed and closed mortgage. The cash helps offset moving expenses, for example.
They can also consolidate their other debts before buying a house using a secured line of credit, says CIBC.