Homeowners hope to be mortgage-free by 65

While nearly three in every four Canadians hopes to be mortgage-free by the time they turn 65, the likelihood of that happening is slim for many, a new poll indicates.

According to the Royal Bank of Canada's Housing Snapshot poll 72 per cent of Canadians who own a mortgage would like to have it paid off by age 65, but 33 per cent of older Canadians are at least 16 years away from that being realized.

"Canadians want to be mortgage-free as they approach retirement age and beyond," said Claude DeMone, director of strategy for home equity financing with RBC. "But … it takes prudent planning and the right advice to stay on track."

In addition to gauging respondents' intentions and what was actually happening with respect to their mortgages, the survey also questioned mortgage owners about what they considered to be the most important aspects of choosing a home loan. Overwhelmingly, Canadians said the most critical feature was choosing a mortgage that had a low interest rate at 96 per cent. Other crucial elements were being able to use flexible or accelerated payment methods.

The survey also asked mortgage owners about whether they thought interest rates would stay the same, increase or decrease over the next 12 months. At 26 per cent, most said they thought rates would stay constant.

If mortgage rates do remain at record-low levels, it may help decrease household debt levels that many Canadians have incurred. Between April and June of 2011, Statistics Canada reported debt levels increased from 147 per cent of household income to 149 per cent. This finding concerned economists at the International Monetary Fund.

"Developments on the housing front require increased vigilance, and consideration may need to be given to additional prudential measures to prevent a further buildup in household debt," wrote the IMF in a recent economic outlook report.

In the meantime, to help consumers reduce their household debt and become mortgage-free sooner, DeMone said Canadians should consider other cost-saving measures. For instance, some mortgages allow borrowers to renew their term two months before it expires. DeMone says borrowers should take advantage of this, as it allows borrowers to lock in low interest rates.

Other findings from the RBC poll revealed the mortgage term borrowers tended to gravitate toward. At 46 per cent, fixed-rate mortgages were favoured, up from 40 per cent when a similar poll was conducted in the first quarter of 2011.