Owning a home is a great source of pride for many Canadians, one that can have many perks and benefits. For some however, it can be a financial downfall: sky-high mortgage costs, special assessments or unaffordable property taxes can quickly become a burden. If you currently own a home and are also carrying other debts, the following warning signs may indicate it’s time to reconsider where you stand.
Your owning costs are much higher than renting. Compare your housing expenses, factoring in all the costs (strata fees, extra insurance, repairs etc), then have a browse through rental listings to find something similar and see how your costs stack up. Unless you have a special housing need that warrants the increased cost, chances are money could be saved by renting.
Most of your income is spent on housing. Take a look at your monthly take-home income and your budget. If you can see that the lion’s share is going towards housing, leaving you very little for day-to-day expenses, debt servicing and savings, the situation isn’t likely to be manageable in the long-term. Unanticipated financial challenges DO arise and if your budget is stretched to its maximum it doesn’t give enough room to deal with them.
You’ve borrowed against most of the equity. If there are multiple mortgages held against your property and the equity you hold is very little, it may be an indication that something else needs your financial attention. Continually putting other accounts into the red to service charges against your property could escalate into a much bigger problem.
If you feel you can’t manage both your debts and your home it may be a good idea to chat with a realtor (and your bank) to see if you’re able to sell the property. Any profit from the sale may be used towards reestablishing yourself into something more affordable, and with any luck the balance used to pay down the debts.
Once your housing costs have become more manageable, focus on the remaining debt. Unfortunately, selling may not have solved the entire problem. If the amount of your debt is still overwhelming, or the sale has resulted in a shortfall, seek assistance from a licensed Trustee regarding how to restructure your debts.