Nearly one in six Canadians couldn't handle a $500 mortgage increase
According to the bank, 16% of respondents said they would not be able to afford such an increase, while more than a quarter, or roughly 27%, would need to review their budget.
The ultimate goal of most Canadians should be the elimination of debt, but the first step needs to be getting rid of bad debt, said Chris Buttigieg, senior manager of wealth planning strategy at BMO, which has the potential to destabilize a households financial situation.
Another 26% said they would be concerned, but could probably handle it.
Such an increase would be generated in the case of a three percentage point hike in interest rates - from 2.75% to 5.75% - on a $300,000 mortgage with a 25-year amoritization period.
Given that interest rates are likely to increase in the foreseeable future, the bank said there was no better time to put together a detailed debt management plan.
A report by Statistics Canada last month found the ratio of household credit market debt to disposable income climbed in the second quarter of 2015 to 164.6%, up from 163% in the first three months of the year.
That means Canadians owed nearly $1.65 in consumer credit and mortgage and non-mortgage loans for every dollar of disposable income.
The report by BMOs Wealth Institute found that almost half of Canadians, 47%, believed that the high level of debt in Canada has been influenced by soaring real estate values, while 40% believed it has been influenced by low rates.
Files from The Canadian Press
Stress Test Best Practices Tool Kit
With the new Office of the Superintendent of Financial Institutions stress test rules firmly in place since January, Canadian homebuyers have learned they need to arm themselves with practical information on how they can ensure they are stress-test ready.
The following is a guide and best practices tool kit for those about to embark on securing their new or next mortgage:
Make a financial plan
Any time a big purchase is at stake, laying out a financial plan is always the best first step to take. By creating a plan, home buyers can protect themselves from increased interest rates and ensure they are staying on budget.
Have a contingency fund
Without question and now more than ever, home buyers need to establish contingency funds. Its incredibly important to have funds set aside when unexpected costs such as property repairs arise. An established contingency fund also looks good to financial lenders.
Pay off debts and increase downpayment
The most important tool in the Best Practices Tool Kit is to pay off debts as quickly as possible and maximize your down payment. If you already have a mortgage, increase the frequency of payments by taking advantage of what the financial institution offers such as accelerated bi-weekly payments.
Broaden search parameters
Although you may have an ideal neighbourhood in mind, it is important to also consider broadening those search parameters. Often there are homes in other neighborhoods that could be a perfect choice if you are willing to commute a little longer.
Im here to help you
I can help you to navigate confusion surrounding the stress test. Ultimately, being stress test ready means being ready for future increases in rate so that you can afford your next home comfortably on your budget.
Preventing Falls on Stairs
Accessible housing refers to homes that are designed or modified to enable independent living for all residents, including seniors or persons with disabilities. Accessibility can be achieved through architectural design and also by integrating accessibility features, such as lowered light switches, grab bars, walk-in bathtubs, lowered shelves and cupboards, modified furniture or by installing electronic devices in the home.
Stairs in the home can be dangerous and can be a barrier to accessibility unless they are designed or modified to reduce the risk of falls. If residents have limited mobility, it may be necessary to install ramps, home elevators or stairlifts to make the home safe and accessible.
A high percentage of Canadians who visit hospitals after a fall on or from stairs or steps in their homes are seniors (men and women 65 years or older). When seniors fall, the consequences can be severe and long-lasting.
Most falls on stairs can be prevented. Prevention starts by keeping in mind that there are risks in using stairs. Good planning and simple strategies can help prevent falls and injuries.
Click here for more information https://www.cmhc-schl.gc.ca/odpub/pdf/63637.pdf?fr=1441901329905