While many Canadians have chosen to purchase their
first homes in these lower interest rate times,
there has also been a large movement to refinance
home loans and pull out home equity for home
improvements, investments, college expenses, and
even high interest rate debt consolidation. In the
past 5 years or so, Canadians have been borrowing
against their home equity in record numbers, to the
tune of about $20 billion dollars in cash since
2001.
While the economy of Canada has had its share of issues in the past few years, the stability in the housing market is providing Canada with a stable and growing economy. And this is despite the down-turn happening to our neighbors down south in the United States. Home owners can clearly see that while other areas of the economy are not doing as well, their investment in their homes are stable and earning them a nice rate of return on their investment.
In years past, Canadians saw their homes as a shelter of safety, yet today they are more than ever before willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to the university, or even boost their RRSP contributions. Where home equity was once sat on, today it is something to be tapped out and used to one’s advantage.
Where did the $20 billion dollars go that Canadians withdrew from their home equity? Much of the equity removed from homes today goes to pay off higher interest consumer debt such as credit cards. In addition, many Canadians are using their home equity to make improvements to their homes or pay for university tuitions for their grown children.
While tapping the equity in your home can be a good idea, you should do so with caution and understanding of all of the possible ramifications. The best thing you can do is to consult an independent mortgage broker (such as myself!) and financial planner to discuss your plans with in greater detail.
While the economy of Canada has had its share of issues in the past few years, the stability in the housing market is providing Canada with a stable and growing economy. And this is despite the down-turn happening to our neighbors down south in the United States. Home owners can clearly see that while other areas of the economy are not doing as well, their investment in their homes are stable and earning them a nice rate of return on their investment.
In years past, Canadians saw their homes as a shelter of safety, yet today they are more than ever before willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to the university, or even boost their RRSP contributions. Where home equity was once sat on, today it is something to be tapped out and used to one’s advantage.
Where did the $20 billion dollars go that Canadians withdrew from their home equity? Much of the equity removed from homes today goes to pay off higher interest consumer debt such as credit cards. In addition, many Canadians are using their home equity to make improvements to their homes or pay for university tuitions for their grown children.
While tapping the equity in your home can be a good idea, you should do so with caution and understanding of all of the possible ramifications. The best thing you can do is to consult an independent mortgage broker (such as myself!) and financial planner to discuss your plans with in greater detail.
Using Your Home Equity to Your Advantage
Canadians purchase homes for a variety of reasons.
Some want the stability of owning their own home,
while others prefer to look at home ownership as an
investment vehicle. No matter what the reason, the
truth is that home ownership has proven itself to
be a good stable investment over time, and one
which many Canadians are profiting quite well with
as the years of their lives pass.
Since the year 1998, the average Canadian homeowner has seen an increase in the value of their home of approximately $43,000. Part of this increase can be attributed to the low mortgage rates of recent years which has provided a large influx of new home buyers into the real estate market.
Since the year 1998, the average Canadian homeowner has seen an increase in the value of their home of approximately $43,000. Part of this increase can be attributed to the low mortgage rates of recent years which has provided a large influx of new home buyers into the real estate market.
