Testimonial: Being A Homeowner
Colin & Sandy Gerrard
Colin and Sandy are in their early thirties and have recently bought their first home for $225,000. They have monthly mortgage payments of $1,150 and their mortgage is amortized over 25 years. With a combined income of $87,000, they usually pay their mortgage, loans and living expenses and have a little left over at the end of the month to go into savings.
Colin: Buying our home has certainly forced us to be more disciplined about money. In the last few months, we've been learning how to stick to our budget. With a little practice, it is getting easier to anticipate expenses until the end of the month. Sandy will be the first to tell you that I've relaxed a lot from when we first bought our home. I am getting used to the idea that owning a house means planning carefully and making choices. But there will always be some unexpected things that crop up.
Sandy: This is a brand-new house, so we don't expect any large repairs or maintenance expenses in the first few years. But we always have to plan for the unexpected. My dad always taught me that preparing for the worst was the best way of avoiding it!
And if it weren't for his good advice, we probably would have done what many Canadians do to protect their homes...
Colin: We decided to get term life insurance instead of mortgage life insurance from the bank. What's the difference? It's simple. Term life insurance allows the beneficiary to decide how best to use the money. When I die, Sandy will get $425,000 (the amount of my insurance coverage) tax-free to pay off the mortgage or do anything else she feels is more important. For instance, she could help her parents move a little closer to Ottawa.
Term life insurance gives you options. Mortgage life insurance doesn't.
Sandy: We combined all our needs into a simple insurance solution. We wanted policies that would cover all our debts, ongoing living expenses, and funeral expenses — not just the mortgage.
Colin: One of the great things about term life insurance is that you're not committed to it forever. In 10 years, when our mortgage is smaller, we could decide to scale back our insurance coverage.
Sandy: Or maybe we'll want to increase our coverage to help protect the children we plan to have. Term life insurance gives us that flexibility.