Canadian home buyers know low interest rates mean greater buying power while Canadian mortgage holders enjoy freedom from the "house rich, cash poor" syndrome that can afflict property owners. When mortgage rates rise and repayment costs consume more than 30 per cent of a homeowner's income, being "house rich" and paying off a mortgage can have a negative impact on purchasing power ("cash poor").

In today's low-interest environment, nearly eight-in-ten Canadians say they can afford the things they want even though they have a mortgage, according to a recent poll. An overwhelming majority of homeowners and prospective home buyers (78 per cent) don't feel their mortgage unduly restricts their buying power. Among those earning more than $80,000 per year, this figure jumps to 93 per cent.

"By working with a mortgage adviser, homeowners can set realistic mortgage payments so they can have a mortgage and a life," said Paul Mims, Vice President of Mortgages and Lending at the Canadian Imperial Bank of Canada (CIBC), the second largest residential mortgage provider in Canada, with $77.9 billion in single-family residential mortgages under administration.

"The vast majority of homeowners [have] a healthy attitude towards their mortgage by looking at it as an investment -- but they still want to be mortgage-free faster. Almost two-thirds (63 per cent) of homeowners and prospective home buyers seem to be in a rush when it comes to paying off their mortgages."

Although 75 per cent of Canadian homeowners and prospective home buyers think that mortgage debt isn't really debt, but an investment, these and other consumers want to pay as little interest as possible over the life of their mortgage. As well as starting out with a low rate, accelerated repayment strategies like making lump-sum payments or arranging weekly payments pay off a mortgage faster.

The popularity of real estate investment is likely to continue, with one-in-five renters planning to purchase a home in the next twelve months. The poll also found that 83 per cent of homeowners and prospective first-time buyers would rather put money into their home than in the stock market.

Low interest rates are not enough to ensure you will pay as little as possible over the life of your mortgage. Negotiating good repayment and renewal terms when you first sign on is also important.

"We've canvassed hundreds of our mortgage experts across the country," says Rick Mathes, TD Canada Trust Vice President for Real Estate Secured Lending. "These suggestions represent the kind of practical information that can help to ensure smooth sailing through what is often people's most important financial transaction."

• Pre-approval costs nothing but a little time and helps to establish a maximum spending limit before you get hooked on a home. Buyers can then shop with confidence understanding all the mortgage conditions up front and knowing how much they can spend during the pre-approval guaranteed interest rate period, which may be as much as 120 days.

• Allow time to find the right real estate agent, lawyer and mortgage lender to suit your needs. Don't put unnecessary pressure on your decision making by getting rushed into relationships or pushed into signing documents.

• Learn about the different types of mortgages and repayment plans offered through the full range of available lenders -- banks, credit unions, mortgage brokers, employers and financial companies. Ask questions to get beyond marketing hype and to the heart of your obligations to the lender and vice versa.

• Gather your financial information in advance so that, when it's time to apply for a mortgage, you can effectively present your borrowing case and negotiate the best possible terms. The items you'll need include confirmation of income, source of planned down payment, MLS real estate listing information (containing property details, photos etc.), a copy of the Agreement of Purchase and Sale, a list of your assets and liabilities, land survey or title insurance and, if you're having a home built, contract and building plans.

• Be aware of closing costs, the legal and administrative charges that accompany any real estate transaction, and which most commonly include lawyers' fees and land transfer taxes. In some cases, home buyers are asked to reimburse the seller for prepaid property taxes or other household expenses.

The low interest rates and loosening of downpayment restrictions have drawn many Canadians into home ownership, but low interest rates may not be available in a few years when it's time for mortgage renewal. What strategies will you employ as protection from the "house rich, cash poor" syndrome? Even though your current purchasing power is hardly dented by your mortgage, putting money aside for renewal may save you stress in the future.

Published: May 11, 2004

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.