Homeownership, Mortgages and Leveraging Equity for Investments - You Could Be Missing Out? - May 14, 2020

Homeownership, Mortgages and Leveraging Equity for Investments - You Could Be Missing Out?

The latest State of the Mortgage Market report was recently released, and it is full of valuable information on the Canadian mortgage market.  The findings provide insight into the strength of the real estate market overall with a focus on the equity Canadians have in their homes. 
The report confirms that Canadians continue to see homeownership as an important element of their long-term financial plans.  And from our vantage point – that is great news.  Our focus at the Walterhouse Realty Group is to help people to gain financial knowledge and access to unique real estate based investment opportunities including private real estate trusts to support them with their immediate and long-term financial goals.  Buying and selling homes is a part of this work that we do – and is not the only service we provide. 

The report shows that Canadians could be benefitting from high return investment opportunities – because in some ways they have earned it.   Canadians pay of their mortgages faster than they originally planned for with their amortization period.  And one in every three families that have borrowed money to buy a home make additional payments to accelerate their repayment schedule.  And on average Canadian homeowners have 73% equity as a percentage of home value.  That means that most homeowners have strong home equity that goes unleveraged for investment purposes and retirement planning.  Well done Canada – now it’s time to find out about how to leverage it for your benefit and the benefit of your family. 



Several other key findings include:

• Home equity in Canada is equal to 73% of the value of the homes.
• 8.6%: Percentage of homeowners who took equity out of their home in the past year (down from 10% in 2018)
• Equity takeout was most common among homeowners who purchased their home during 2005 to 2009
• $72,000: The average amount of equity taken out (down slightly from $74,000 in 2018)
• Most common uses for the funds include:
  • $23.8 billion (39%): For home renovation and repair
  • $14.1 billion (23%): For debt consolidation and repayment
  • $11.4 billion (18%): For investments
  • $7.3 billion (12%): For purchases
  • $3.6 billion (6%): For “other” purposes
• “The forced saving component of mortgage payments has risen sharply in relation to incomes,” Dunning noted. “In 2019, forced savings via mortgage payments amounted to 20.1% of monthly incomes, which is far above the long-term average of just 10.0%).”
• 91%: The percentage of homeowners who are happy with their decision to buy a home.

 
Bottom Line
The fear and uncertainty many are feeling right now are very real, and this is not going to be all smooth sailing. We can, however, see strength in our current market through homeowner equity. That may be a bright spark for your financial future. 

To learn more about home ownership to leverage equity to enhance your long-term financial r
returns, give us a call at 416-522-1112 or email ian.walterhouse@century21.ca.  
 
 
 
 
 

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