Saturday, January 22, 2011

New Canadian mortgage rules.

Once again our wonderful finance minister, Mr. Flaherty, has changed the mortgage rules in an attempt to further strengthen our economy by protecting us from ourselves.

He seems to be of the opinion that the reason we, Canadians, are so heavily in debt is because we have huge mortgages that have taken us to the brink of financial collapse.

Give me a break!

The reason we are over our heads in debt is very complex. However, a mortgage is only one of many possible reasons. Think about it, you have to live some where don't you?
So you either pay a mortgage or you pay rent. Either way you need a place to live and it's going to cost you something.

If you where to ask the average Canadian what he/she thought was the biggest reason they where in debt, I'm sure it would not be a mortgage. In fact I'm sure that there are a huge number of Canadians who do not have a mortgage and yet are way over their heads in debt.

If our finance minister wants to help us get out of debt, then perhaps he should "force" the banks to lower our credit card and loan interest rates.
Instead he decided to force them to tell us how long it would take us to pay our current balance if we only make the minimum payment. Is this an attempt to help us or simply piss us off?

The website, Canadian mortgage news has a very good article about the new rules.
Find it here:

The only part I don't agree with is the idea of "rolling" your credit card, line of credit or any other unsecured loan into your mortgage. Even though your interest rate is lower in a mortgage then almost any other debt, you would be taking unsecured debt and turning it into secured debt against your house.

If you default on a loan the lender can at worst garnishee your wages.
If you default on a mortgage the lender can take your home.

Given a choice, I would prefer to live indoors with a little less to spend at the end of the week.

In the end all this really does is make the dream of home ownership even less likely for a majority of Canadians.


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