e've been conditioned to think of all debt as "bad debt," but can there ever be such a thing as "good debt"?

The latest data from the Bank of Canada shows that the level of debt in Canadian households rose by its fastest pace since 2012. In fact, total outstanding credit rose to $1.869 trillion in August 2015, a five percent hike over August 2014 and the highest year-over-year increase since October 2012. Mortgage debt rose seven percent in the same period of time while other consumer debt such as credit cards and auto loans were up two percent annualized.

Canadians continue to take advantage of unprecedented low interest rates by taking on more and more debt, but when it comes to housing, sometimes homeowners have no choice but to take on more of a mortgage than they had anticipated. In many cases, with the rise in real estate values in many cities, the short-term pain may pay off with long-term gain as housing prices traditionally appreciate in value over the long term. Even if the property owner is using it as an investment property, the rental income from the property can help offset the investment home loan as you build equity.

Understanding the difference between good debt and bad debt can help strengthen your financial health. Please call to find out more.

From The Virani Team December 2015 Newsletter - Courtesy of Market Connections Inc.