Many Canadians own or aspire to purchase property – but mortgage literacy is lacking
TORONTO, June 2, 2014 /CNW/ - The majority of Canadian adults (61 per cent) don't know what options are available to them if they can't pay their mortgage, according to a survey of 1,500 Canadians released today by Lawyers' Professional Indemnity Company (LAWPRO)®. Another key survey finding –79 per cent of Canadians currently own or have considered purchasing property – paints the picture of a nation that values home ownership, but lacks the mortgage literacy necessary to safeguard their biggest asset.
"Arming yourself with knowledge is key," says Ray Leclair, Vice President, Public Affairs at LawPRO. "If you're experiencing financial difficulties, you don't have to go to your lender alone and unprepared. Speaking with a lawyer is an investment in learning your rights and obligations regarding a mortgage you can't pay. An experienced real estate lawyer can also help you find solutions and strategize how to protect your most significant asset."
Mortgage literacy of particular concern among younger Canadians
The survey findings were particularly alarming for the 18 – 34 year old age group, as almost three quarters (74 per cent) of Canadians in this group don't understand their options if they can't make a payment. These younger Canadians are more likely to be first-time homeowners, managing their first mortgage, and in the early stages of paying it off.
Understanding mortgage terms and options is more important than ever, as the employment landscape has changed dramatically over the past few decades. Limited job security in traditional roles and the rise of self-employment and freelance work means that income—and mortgage payments—aren't as secure as they may have been for previous generations.
You're not alone – seek legal and financial guidance
There may be a number of solutions available if you are having difficulty meeting your mortgage payments, or expect to miss payments in the future, including but not limited to:
- restructuring your payments;
- refinancing with your lender or another lender;
- working out an agreement to make forward payments despite missed payments in the past;
- reviewing revenue possibilities from the property;
- selling your home on your terms;
- and reaching out to friends/family for a loan.
A lawyer can provide valuable advice and insight as you consider your options. For example, if parents, other family members or friends offer to help meet your payments via a loan or gift, a lawyer can develop agreements to clarify whether the lent/gifted funds represent an ownership interest, or set the terms of repayment.
"If you're behind on your mortgage payments, other priority payments associated with the property, such as taxes, condominium fees and utility bills may also be affected," adds Leclair.
"It's wise to engage in a dialogue with your lawyer and lender sooner rather than later if you are behind, or anticipate running behind on payments."
Canadians can find a real estate lawyer through a variety of sources:
- Referrals from friends and family
- By looking up a lawyer on online directories maintained by provincial law societies
- Workplace benefit programs often provide lawyer referrals through Employee Assistance Programs (EAPs)
- The locate-a-lawyer feature for obtaining referrals to real estate lawyers on the TitlePLUS website, titleplus.ca.
Lawyers' Professional Indemnity Company (LawPRO®)is owned by the Law Society of Upper Canada and licensed to provide professional liability insurance and title insurance in numerous jurisdictions across Canada. Through its malpractice insurance program, LawPRO insures about 25,000 practicing lawyers in Ontario, as well as providing them with risk and practice management programs to assist them in their law practices under the practicePRO® banner. LawPRO's TitlePLUS® title insurance program is available to more than 4,900 lawyers across Canada and Quebec notaries to better meet their clients' needs for professional legal advice and superior protection for their real estate transactions.
From April 30th to May 1st 2014 an online survey was conducted among 1,510 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 2.5%, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec, language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.