Nearly half of Canadian home owners lack a sufficient emergency fund and 40% have difficulty meeting ownership costs, according to a report by the Manulife Bank of Canada.
“It’s undoubtedly stressful living paycheque-to-paycheque,” Rick Lunny, president and CEO of Manulife Bank of Canada, said. “If you don’t have extra cash at the end of the month, it’s very difficult to build a rainy-day account. For those who find themselves in this situation – a good place to start is working with an advisor to create a budget. Many people are surprised at how much of their money is going toward things that they don’t consider that important.”
Agents can also play a part in helping clients better prepare for the home buying process by schooling them on all the extra expenses that come along with realizing the home ownership dream.
According to the report, the average Canadian home owner has a mortgage of $174,000 in mortgage debt and more than a quarter of their income goes toward making those payments. Nearly 30% say they spend 30% of their net income on those payments.
“A financial buffer is an important part of a financial plan,” Lunny said. “A high-interest savings account is a good option. Or, if you’ve got a home equity line of credit, you could use your savings to reduce your debt and save interest - and still have access to that money if an emergency arises.”
The study also points to the possible ignorance of Millennials around the current state of mortgage which, despite recent increases, remain at historical lows.
Despite this, one-third of Millennials say mortgage rates are too high.
New study points to just how much this growing home buying cohort is struggling to get into – and stay in – the housing game.