Half of Canadian homeowners under mortgage debt
Canada, 17th May: Nearly half of Canadian homeowners are burdened by mortgage debt which they are likely into their retirement.
This has been revealed by a latest survey by BMO Financial Group Retirement Institute.
Canadians’ retirement savings affected by mortgage debt—The survey states that Canadians agree their mortgage and debt burden will affect their retirement savings to a great extent.
Nearly fifty-two percent of Canada homeowners are of the view their debt is posing an obstacle in the way of savings or planning for retirement, the survey findings by the Toronto based financial group show.
Pay major debt before retirement–According to head of the BMO Retirement Institute, Tina Di Vito, paying off one’s mortgage before entering your retirement is vital. That’s because clearing your mortgage will end a significant portion of your debt.
It will be big relief and will eliminate the compulsion of managing higher amount of debt after retirement, adds Di Vito.
On the other hand, paying out huge sums of money for clearing your debts is really difficult especially when a person is not getting any employment income after retirement, she states.
Saving for retirement versus paying off a mortgage—Now the question that comes in many minds is which should be the top priority—paying off one’s mortgage debt or making savings for retirement? Well, the experts suggest striking a balance between both while giving higher consideration to clearing off a mortgage.
According to a Mortgage Expert with BMO Bank of Montreal, Laura Parsons, it is advisable to try paying off your mortgage before you reach retirement especially if the retirement is just a couple of years away.
However, for younger Canadians wanting to become homeowners, the best thing is to choose options leading to faster clearing off mortgage debt before reaching retirement, adds Parsons.
Tips by experts for eliminating mortgage debt faster—
- Increasing payments—Increasing your payments can help in reducing the duration of your mortgage.
- Choosing a shorter amortization—Going for a shorter amortization mortgage can help in paying lesser total interest, ensuring a debt-free retirement while offering protection against the likelihood of increase in interest rates.
- Bi weekly—Increasing frequency of payments to bi-weekly from bi-monthly can help in paying easily.