A new trend we are seeing is more people refinancing their homes to consolidate debt and put away funds for the proverbial ‘rainy day’ should it come unexpectedly.

There is growing concern about job security in this volatile economy as export manufacturers have seen demand diminish for their products as both the U.S. and European markets grapple with the threat of another recession. RIM in Waterloo recently laid off 2000 workers in a proactive move to weather the storm should things worsen. This has had a ripple effect on other businesses as well in south western Ontario.

The current consensus on our ‘near term’ economic future has turned pessimistic as unemployment increased last month and remains a persistent problem. Canadian consumers are putting off or delaying ‘big ticket’ purchases ‘just in case’.

With mortgage money so cheap, savvy Canadians are deciding to ‘self insure’ against job loss by using home equity to put away (usually) 6 month’s worth of living expenses just to be safe. Of course this can also be done proactively for anticipated maternity/paternity leave, sickness and injury, and so it is looked at as low cost ‘insurance’ against the unexpected.

We had a couple recently do this very thing AND borrow funds to put in a basement apartment to generate rental income to help them pay down their mortgage faster. Since prepayments are voluntary, creating rental income can be viewed as another form of ‘insurance’ and is a very smart thing to do. It also increases both the value and marketability of a property.

If you are concerned about your job, or are looking for professional guidance or advice on financial strategies that may be helpful to you, call us today. We are on your side and remember, we have many more options than the banks can offer you, and our services are free, OAC.