16 June 2011
Canadian borrowers have already been warned to pay attention to higher interest rates while making decision about the loan amount they want to get. It’s necessary to make sure they can afford such debts even when the rates rise.
As professional Mortgage Brokers, we can’t comment on “majority of Canadians’ financial situation. Most of our clients don’t go beyond the allowable total debt limits with their mortgages. But the real problem is non-secured debt, because it’s quite easy to get large amounts of credit card debt.
In case of mortgages there are strict lending guidelines and criteria, while the credit card industry doesn’t have such limits when it comes to the amount of debt a borrower can get. There were some cases when we couldn’t believe how much debt our clients have been able to accumulate compare to their income.
It should be noted that borrowers who want to get a variable mortgage have to qualify at a much higher rate to make sure they can afford their mortgage payments when rates go up. In other words, they are protected from potential mortgage troubles in the future.