Your Debt Solutions Experts
BDO Kamloops

272 Victoria Street Suite 300,
Kamloops, British Columbia
V2C 1Z6
Phone: (250) 372-9505

Your Debt Load: The Good, The Bad and The Future

How well are you managing your debt load? That question might get your heart racing. That’s why in this month’s podcast, our LIT’s discuss why you need to assess your debt before you renovate your home, and plan ahead for anything that might impact your repayment.

Last year, our home reno poll found that high housing prices made many Canadian families opt to stay in their homes and renovate them instead, which for some lead to a great deal of debt. According to the poll results, many families said that they were willing to put retirement and debt repayment on hold while they updated their homes and half of those families weren’t following a renovation budget.

Since then, there have been three interest rate hikes and more are projected to come. And to add to this load, mortgage rules have become stricter, making it more difficult for families to qualify for a HELOC or new mortgage terms.

How has attitudes towards debt changed over the past year?

Let’s start with some good news:

  • Less Canadians are falling behind in their mortgage payments.
  • Canadian households are keeping up with their credit card debt and delinquency rates have fallen to 3 per cent.
  • Canada’s unemployment rate is at its lowest in 40 years.

Bad news:

  • A 2017 CPA poll showed half of Canadians are living paycheque to paycheque and many wouldn’t be able to pay their bills if their paycheque were delayed by a week.
  • Increasing interest rates through 2018 means Canadian families are expected to default on credit card payments.
  • Debt to income ratios continues to climb. Canadian currently owe on average $1.70 for each dollar of disposable income.

How to future-proof your finances

Interest rates still remain relatively low and the temptation to borrow for a renovation can be high. Our advice?

  1. If you’re on a tight budget, fight the urge. Delay your renovation until you have enough money saved up.
  2. If you must renovate due to an urgent concern in your home such as a wet basement, leaky roof or moldy bathroom, set a budget and stick to it.
  3. Deal with debt now, before interest rates rise further. Take a look at your debt relief options or speak to a professional.

Our 2017 poll showed that homeowners take an average 2.5 years to pay back a renovation and if interest rates continue to rise as rapidly as they have since last year, that means it can take longer and be much more difficult to pay back.

Will you take your debt load into account before borrowing for a renovation? Tune into our podcast to hear more great advice.

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