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Being a homeowner is a big step, both financially and emotionally. But when it comes to finances, a new survey shows that homeowners take their financial obligations seriously. The survey by Genworth Financial Canada surveyed 1,444Canadian homeowners to find that homeowners are, in fact, more financially stable.
When it comes to credit card debts, 65% of homeowners pay off their debts monthly. Compared to the 48% of non-homeowners that pay off credit card debts monthly, this indicates that homeowners plan their finances more so than non-homeowners. In the last year, ¼ of homeowners made lump sum payments or accelerated those payments in order to help pay down their mortgage quicker.
The average Canadian homeowner has about 67% equity in their home, which is 27% more than our American counterparts. About 55% of Canadian homeowners believe that their finances are in good standing, with another 13% feeling great about their finances. Approximately 44% of homeowners pay all of their bills in a timely manner, and also set aside some savings. These statistics gathered help indicate that homeowners take a lot of preparation to ensure that they are financially fit.
12% of homeowners have requested a credit report within the last year, which shows that homeowners are taking the initiative to be informed about their credit. Two companies provide credit reports within Canada: Trans Union and Equifax. Both companies allow you the ability to instantly see your credit score and report for a fee, or have a copy mailed to you free of charge. Your credit report shows all of your trading lines, both active and closed, missed payments, balances, limits, and contact information. It is important to check your credit in order to ensure that there are no mistakes on your report and all the information is up-to-date.
In your credit report, depending on the type that you pay for, you will receive a credit score, which is a 3 digit number that represents your credit responsibility. Scores typically range from 300 to 850 and the higher the value, the more responsible you are considered. Having a high score is usually beneficial in terms of getting financing. FICO, the U.S. credit agency revealed that about 25% of Americans have a credit score under 600. Having a credit score under 600 makes it more difficult to obtain a competitive rate from lenders, and may also hinder you from even being able to get financing. Equifax and Trans Union have been reported a downward trend in the number of Canadians with credit scores 720 or higher, and an increase in the number of individuals with scores under 660.
With the 65% of Canadian homeowners and 48% of non-homeowners that say they pay their monthly bills on time, delinquency rates for credit cards show that Canadians are better at paying their dues. For the first quarter of 2010, about 2.2% of the population in the U.S. neglected to pay off their credit cards in 90 days (3 months), as opposed to the 1.4% of the population in Canada. Another redeeming factor is that Canadian mortgage delinquencies were at a mere 0.45%.Being financially fit is not an easy task.
It takes hard work, practice, and planning to ensure that your finances remain stable. If you’re looking to start becoming more financially stable, start by making a budget plan. For more information, or for a complimentary budget plan, contact Signature Service Financial. via email: info@ssfi.ca.
Five ways to achieve financial stability towards home ownership
Although many Canadians feel comfortable taking on debt, household debt has doubled in the last 20 years, to a record of $1.41 trillion. That means, on average based on everyone living in Canada, each person would have about $41,740 worth of debt.
It is important that each household works towards maintaining a plan, so that one day owning a home can be attainable, and not just a dream. The first most significant step towards home ownership is to achieve financial stability.
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