If I Have a Mortgage, Am I in Debt?

If I Have a Mortgage, Am I in Debt?

Written by Caitlin Wood
Last Updated September 30, 2015

Simply put, the answer is yes. If you have a mortgage you are in fact in debt. A mortgage is like any other form of loan or credit; you are borrowing money in order to purchase something you can’t afford on your own. The fact of the matter is your mortgage is probably the biggest debt you currently have. Sure it may only be one part of your total debt, but it’s there and it’s expensive so it’s in your best interest to start thinking about your mortgage as real debt that has a real impact on your financial life.

Why do people think a mortgage isn’t debt?

Lots of homeowners do not consider their mortgages when they calculate their total debts. And to be honest we completely understand why they don’t. For the most part a mortgage is a necessity for the average family, obviously this is a generalization but if you live in Canada and you have a good job or a family you probably also have a house and a mortgage. Because a house is seen as a necessity people often don’t think of their mortgages as debt.

Furthermore, debt comes with a lot of negative connotations. Technically being in debt isn’t a good thing so it makes sense that most people wouldn’t want to see their homes as a bad thing. Mortgages are a financial tool, just like a credit card, car loan or personal loan but because they are used to purchase a home people tend to be slightly more emotional about them.

There are a lot of reasons why mortgages are often not considered debt, including the fact that they are used to purchases a house which is an asset. Because assets often increase in value, a mortgage is then typically referred to as a good kind of debt. The one thing we really want toy to take away from all this is that, whether you think that a mortgage is good debt or bad debt and whether or not your emotions are involved, at some point you’re going to have to calculate the total amount of debt you have and your mortgage needs to be included.

Reasons You Need to Count Your Mortgage as Debt

Owning a home is expensive, there are countless expenses associated with both the purchasing process and then the living process. The average person understands that they’ll need to pay for utilities, insurance, repairs and upgrades along with their monthly mortgages payment. But what they don’t realize is that this is exactly why they need to consider their mortgage when calculating their total debt.

So you use your mortgage to purchase an asset, which is a good thing and technically you need somewhere to live so a house is a good idea but you still need to consider it debt, the kind of debt that costs a lot of money and that could potentially be a sink-hole for the majority of your income.

Apply for and then being approved for a mortgage that you aren’t sure you can make payments on could potentially ruin your finances. Mortgages are serious loans and put you in debt for upwards of 50 years, if this isn’t a reason to consider your mortgage when calculating your debt, then we don’t know what is.

 Is a Mortgage a Good Idea?

After all that, now what do you do? Houses are great and mortgages help you buy them so if you want to buy a house then you need a mortgage. A mortgage isn’t a bad thing; it’s just an expensive thing, which means you need to consider all your options carefully before you sign on the dotted line. So, when is it a good idea?

  • When you’ve saved up for years to help with the costs
  • If you’ve always dreamed of owning a home
  • If you fully understand the commitment you’re making

Just make sure you put a bit more thought into your decision if:

  • You feel like you should buy a house just because everyone else does
  • If the thought of a 50 years commitment is too much to handle
  • If you don’t have any money saved to help with the costs

Need Another Opinion?

A second opinion never hurts so if you’re currently thinking about purchasing a home and need some help with the mortgage process you should get in contact with one of our mortgage experts. They can help you better understand the mortgage application process and answer any questions you might have. If you want to learn about private mortgages, then click here.

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Save With Loans Canada

Special Offers

Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.

View Offer
Build Credit With Refresh

Build Credit With Refresh

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $10/Month

Build Credit For $10/Month

With KOHO’s prepaid card you can build a better credit score for just $10/month.

View Offer
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.