Most Canadians think they won’t be Mortgage-Free Until Age 57
It seems as though we can certainly forget about Freedom 55. For now anyways.
According to a recent survey conducted by CIBC, the average Canadian homeowner believes that they won’t pay off their mortgage entirely until they are the age 57.That’s well before retirement for most people, but it’s also two years later than what the survey said last year, when most homeowners in the country believed they’d be mortgage-free by the age of 55. This has once again heated up the debt talk, and has everyone questioning just how deep into debt we’re willing to go.
The survey didn’t just ask when homeowners thought they’d be able to pay off their mortgage. It also asked what’s holding them back from paying it off sooner; as well as what they’ve done to be mortgage free faster. The results are disappointing.
Half of the Canadians surveyed said that other debt such as credit cards, lines of credit, and personal loans are keeping them from paying off their mortgage more quickly.
“Our view would be that Canadians are taking a look at their broader finances and are working to pay down other debts to reduce their interest costs,” says Colette Delaney, executive vice-president of mortgage, lending, insurance, and deposit products at CIBC.
“Those with a growing amount of non-mortgage debt are less likely to be taking extra steps to pay down their mortgage, and this can lead to a longer payback period.”
But with half not being able to pay down their mortgage faster, that means that half the group is still able to pay down their mortgages faster – even if they don’t always take advantage of it.
11 per cent of those who said they’ve taken on more debt since buying a home also said that they made an extra payment on their mortgage last year. While 19 per cent of those that haven’t taken on more debt were able to make lump sum payments.
And while the average age to be mortgage-free in Canada might be 57, that doesn’t hold true for all the provinces. In fact in British Columbia, the average age expected for paying off a mortgage is 59, while those in Manitoba and Saskatchewan said they’d be mortgage-free by the age of 58. Throughout the other provinces and territories, 57 was the average age.
Delaney says that while paying off your mortgage is nice, and certainly frees up many of the restraints homeowners feel while still making that monthly payment, not paying it back could have serious repercussions – mostly that it will hurt homeowners in retirement.
“Being mortgage free sooner can help accelerate retirement savings, but carrying a mortgage into your late 50s can have the opposite effect and make it more challenging to reach your long term saving goals,” she says.