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MORTGAGE OVERLOAD

Forced to take out a second mortgage

Soaring house prices have made Canadians wealthy on paper, but what are households giving up in order to make their mortgage payments? As part of our package on the financial squeeze being felt by Canadian homeowners, we profiled six families across the country to see how they are coping.

Name and age: Scott Baldwin, 48, and Daria Hasselmann, 51

Location: Vancouver

Family description: Son, age 12

Price paid for home: $935,000 in 2010

Outstanding mortgage balance: $768,000

Non-mortgage debts: Line of credit (unspecified amount)

Biggest monthly non-housing expense: Food and dining

Are you regularly putting money away for savings or investments? Yes. RRSP, RESP, work pension plans.

If you had to find $3,000 for an emergency, where would it come from? Savings

Biggest joy you have as a homeowner: Entertaining family and friends

Biggest financial regret as a homeowner: Running into a difficult situation. In this case, discovering damage done by an undisclosed fire in basement ceiling.

Scott Baldwin and his wife, Daria Hasselmann, came up with a large down payment when they bought their Vancouver house for $935,000 in 2010. Then they got the financial shock of their lives.

The basement of their two-storey house, built in 1908, required an unexpected overhaul owing to concealed fire damage traced back to the 1940s.

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Fortunately, the couple survived the surprise of various renovation expenses that cost them more than $200,000 within a year after they moved in. Their dining-room table, large enough to seat 12 people, was constructed using material salvaged from charred beams.

"Everything happens for a reason. We're lucky we're in a strong relationship and we have a great family," Ms. Hasselmann said. The 51-year-old corporate-social-responsibility adviser lives with her husband and their 12-year-old son on Vancouver's east side.

"We basically pulled through by the hair of our chin because we had savings and good support from our financial institution," said Mr. Baldwin, a 48-year-old product manager.

The renovation drained their savings account and also forced the couple to take out a second mortgage.

Over the years, they have budgeted for property improvements that they saw coming. "Last year, we replaced our fence. The year before, we did our deck and patio," he said.

While the couple's down payment exceeded 25 per cent of the purchase price, the extensive renovation in 2010-11 forced their mortgage obligations to surge. They recently had an outstanding mortgage balance totalling $768,000, including the second mortgage. Vancouver house prices have soared since they bought, and financially, that has been comforting.

"The lower third of the house is brand new. We have a good, strong foundation, so to speak," Mr. Baldwin said. "We have a little poster in our kitchen that says when life hands you lemons, make a gin and tonic."

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Photo by Darryl Dyck for The Globe and Mail




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