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Discussion – 


Discussion – 


The Canadian and U.S. household debt crisis: the dangers of mortgage renewal

The United States and Canada are currently going through a period of varying degrees of crisis. Many households are affected by this bad patch. The consequences could be disastrous. It’s fair to ask how the crisis might affect households, especially those with mortgages. Let’s take a closer look.

How is the debt crisis impacting households?

The debt crisis facing households in Canada and the United States is having an impact on many sectors of the economy. The potential consequences of this crisis are manifold. The latter affects indebted households, the real estate market and overall economic health.

One of the major impacts is the increased risk of mortgage default. Mortgage renewal is becoming a real headache for many homeowners. They find themselves unable to repay the principal on their loan. Extending the amortization period, however, only worsens the situation. It defers full payment for the property for several years.

Rising interest rates and property prices in major cities only accentuate these risks. Montreal, for example, has seen an increase of varying degrees. This is due to the housing shortage. This subsequently complicates the sale and rehousing process for homeowners unable to take on their new mortgage.

Increase in profitable sales under constraint

This is a real estate sale where the owner is forced to sell his property quickly due to financial difficulties. These worries may be due to rising interest rates, job loss or other costly contingencies.

To avoid default, the owner is obliged to sell his property as soon as possible. Creditors can push him to speed up the sale. In this haste, the owner is often forced to set a sale price lower than the property’s real value. This always results in a financial loss.

This forced disposal is having a negative impact on the real estate market. This puts downward pressure on prices. When many owners are forced to sell at lower prices, the value of similar properties in the same area plummets.

How to deal with the crisis and a worrying financial situation?

For households in debt, it’s essential to manage their financial situation as effectively as possible. For example, it’s a good idea to draw up a list of expenses and income on a systematic basis (at the beginning of each month, for example). Then sort your expenses in order of importance, and try to reduce those you consider unnecessary. If you’re having trouble repaying your mortgage, don’t hesitate to contact your creditors to arrange more flexible payment solutions.

Consult us for personalized recommendations. If you are facing major financial difficulties, it is also possible to sell your property before you reach default. If you have any further questions, please contact our experts.

Que ce soit de revoir votre budget, d’identifier des biens que vous pourriez vendre pour vous sortir de l’endettement, de négocier des nouveaux termes de paiements avec vos créanciers ou déposer une proposition de consommateur, voire vous aider à repartir à zéro en considérant la faillite, nous vous aiderons à y voir clair. Nous vous recommanderons la meilleure solution pour vous, en toute confiance et en toute confidentialité.

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