How did you learn about mortgages? Did you explore the ins and outs of these legal encumbrances in high school or University, or were you thrown into your first mortgage on the way to buying your first home?

Since so many property owners are not completely clear about what they got into when they signed the mortgage document, it's not surprising that the national mortgage market is a mystery to them. This compound ignorance of something that impacts so powerfully on home and finances makes too many people vulnerable to hype, hysteria and plain old fraud.

Unsettling rumours of economic troubles ahead will persist—that's what gets the "clicks" and sells advertising. Knowledge will insulate you from unfounded concerns, and help you prepare for genuine risk.

Traditional education rarely touches on mortgages—the greatest debt that most Canadians will willingly, if not eagerly, take on. Reportedly, mortgages represent approximately two-thirds of total household debt in Canada. Would you like to raise your level of financial understanding, so you'll know how to lower the balance owing on your mortgage?

Settling down with a novel-length book on mortgages may not be high on your list of entertaining ways to spend a few evenings, but the free, 18-page, readable ebook (PDF) Canadian Mortgage Markets Primer may be just the thing to spark your interest while it expands your knowledge of how mortgages work.

PrimerAuthor Eric Lascelles, Chief Canada Macro Strategist for TD Securities, was prompted to compile this "so what's it all about?" overview of Canada's mortgage market to satisfy growing interest from international clients. The apparent stability of Canada's banks and housing markets is puzzling to them in the face of international financial collapse. Canada-watchers "were worried the Canadian market would be in trouble down the road."

Lascelles explained that the Primer covers "the real details, the plumbing of this market." He emphasized that the point was not to argue that the market was good or bad, but to clarify financial basics, reveal the elements of stability, and explain how everything fits together.

• Statistics are relevant and clearly explained. For instance, "Canada's sub-prime mortgage market never grew particularly large during the boom years—peaking at less than 5% of total originators, versus almost triple this in the U.S.—and most of the Canadian sub-prime mortgages managed to avoid some of the more damaging practices such as NINJA (no income, no job or assets) or teaser interest rates."

• American-based misconceptions are clarified. Too much American television has confused Canadians as to key differences in what happens if you don't make mortgage payments and want out of your mortgage. The "walk-away" U.S. foreclosure solutions are not options in most cases. "The majority of Canadian mortgages are subject to recourse, meaning that in the event of a foreclosure that results in loss to the lender, the lender can pursue the borrower's other assets and income by way of legal judgement. This provides a disincentive for potentially weak borrowers to extend themselves beyond their means, and an incentive for current borrowers to continue making payments and avoid foreclosure."

• Read-between-the-lines opportunities may enable you to transform this factual tool into inspiration for improved personal financial strategies. For instance, "…Canadian customers often obtain all of their banking services from a single financial institution, making them disinclined to shop more broadly on specific products. It is also the case that Canada's mortgage market is far more concentrated than in the U.S., making it easier for borrowers to shop around themselves." Details on the frequently under-utilized mortgage prepayment option may also be of interest.

The Canadian Mortgage Market Primer can be found here.

The full interview with Eric Lascelles is available at BestFriendWorstEnemy.com.

In conversation, Lascelles said he does not believe there is a Canadian housing bubble to burst.

He describes banks as immune to financial downturn since the federal housing agency, Canada Mortgage and Housing Corporation, insures banks against mortgage losses (as the Primer explains).

The 10 to 12% correction in housing prices that Lascelles sees ahead, will impact on individual property owners, but be an absorbable blow and not cause widespread hardship. [bullet] Those with variable rate mortgages may be more immediately sensitive to rate increases, but the overall impact will be benign.

Lascelles' final advice to property owners is "view home as a place to live, not purely as an investment." For greatest stability in these uncertain times, this experienced financial expert suggests placing the emphasis on purchasing a house or condominium unit that is affordable from the very beginning. The days of dramatic financial stretches into high-ratio mortgages should have taught us something.

Published: October 7, 2010

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Futurist and Strategist PJ Wade is "The Catalyst" - intent on "Challenging The Best to 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 8 books and more than 1800 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!", which is filled with suggestions and cautions on protecting, building and managing home equity. Her new business book, "What's Your Point?: Cut The Crap, Hit The Mark & Stick!" will be published in 2012. 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 keynotes, blogs, books and information on a range of 21st-Century topics, visit TheCatalyst.com.