Around 60% of consumers with private mortgages do not have an exit strategy: FSRA
In its commemoration of Financial Literacy Month, the Financial Services Regulatory Authority of Ontario (FSRA) has warned that consumers might not be spending enough time in considering important financial decisions.
The regulator found that approximately 50% of consumers spend more time researching their last mobile phone purchases than they did their financial services professionals, while nearly 40% spend more time planning their vacations than understanding their mortgages.
“It’s more important than ever to spend and invest smarter,” said Stuart Wilkinson, chief consumer officer at FSRA. “The opportunities are there; consumers just have to take advantage of them.”
FSRA added that around 60% of consumers with private mortgages admitted that they do not have an exit strategy for transitioning back to a traditional mortgage, while nearly 50% said that they know more about their favourite TV show than about the particulars of their pension plans.
Wilkins called on consumers to use reliable resources when making financial decisions. FSRA found that among Ontarians, most bits of financial advice they use came via word of mouth (40%) and the internet (35%).
“By investing time, we believe it could lead to better decisions and possibly savings down the road,” Wilkinson said. “All financial decisions carry weight.”
Antoinette Leung, Head of Mortgage Brokerage Conduct at FSRA says the goal is to ensure that when a consumer is working with a mortgage broker, they receive a mortgage suitable for their needs.https://t.co/FXjgy8RRUO#mortgageindustry #mortgagebroker #specializedlending
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 4, 2023
FSRA encourages consumers to work with brokers more
Ensuring that one is working with a qualified professional will go a long way towards making the best financial decisions.
“Verify the brokers’ credentials and ask questions to understand how the mortgage they are recommending will impact your financial situation,” FSRA said.
“Ask the right questions. What credentials do you have and from what credentialling body? Individuals using the financial planner and financial advisor titles in Ontario must hold a credential from a FSRA-approved credentialing body. This means they will be required to have a minimum standard of education and will be held accountable for their conduct.”
The increasing market prominence of private mortgages means that developing an exit strategy with a qualified professional is a must.
“Private mortgages can be an option for some consumers, such as those who are unable to qualify for a traditional mortgage,” FSRA said. “But it’s important to remember, the terms can be very different and private mortgages should be a short-term stop gap, not a long-term solution.”
