Wealthy Canadians’ primary residences are worth, on average, $1.5 million, according to a BMO Private Banking study, which examines real estate and high-net worth Canadians (those with investible assets of $1 million or more).
Other findings:
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– Almost all (95 per cent) own their residence (versus renting).
-Fifty-eight per cent state they have paid off their mortgage.
-Among those with a mortgage, the average amount they have left to pay back is $176,000.
BMO Private Banking Platinum Banking vice-president and managing director Craig Downey said: "It’s encouraging to see that so many affluent Canadians are making it a priority to be mortgage free, a significant financial milestone for any home owner. For those who still have a home loan, your banker can work with you to design a cashflow strategy as part of your wealth plan that will allow you to pay off your mortgage years sooner. In the process, it will also reduce your overall borrowing costs and could allow you to put money aside for other priorities."
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By GlobalDataWith cottage season just around the corner, the study also revealed more than one third (36 per cent) of high-net worth Canadians own at least one additional property.
Of that group, 40 per cent own two or more extra properties. On average, the value of the second property is $708,539.
Top reasons for having a second property include:
-Purely for vacation purposes (47 per cent)
-It is an investment (39 per cent)
-It is an income-generating property (36 per cent)
-It is something to pass on to future generations (28 per cent)
-It is used to escape winter or hot summer weather (18 per cent)
-It will be used for retirement (12 per cent)
-It will be used for business purposes (9 per cent)
Among those with an additional property, 80 per cent own one in Canada, 27 per cent own in the U.S., 11 per cent own in Europe, eight per cent own in Central America, South America or the Caribbean, seven per cent in Mexico or Asia respectively and five per cent in Australia.
Downey continued: "Many high-net worth families have significant equity accumulated in their principal residence and investment portfolios. For those looking to diversify their investments, purchasing an additional property in Canada or abroad can be a great option as interest rates are close to all-time lows. However, before they sign on the dotted line – it’s important to ensure the purchase of another property does not impact their current lifestyle and fits well with their wealth plan."
"Additionally, having the financing already in place puts more control into the hands of the buyer. They can avoid being subject to financing conditions or the complicated process of purchasing or financing a property abroad," he added.
