The unforeseen is your enemy. At any time, job loss, a sudden drop in income, unexpected home expenses or a medical problem can occur out of nowhere. On a recent survey, approximately 40 percent of Canadians with a mortgage say they don’t have an emergency fund saved up.
Any of these unexpected events, could make a homeowner miss a mortgage payment. Many Canadians believe having a credit card cash advance is a back up plan. Others expect to borrow from a friend or family, which again, is a bad idea as this could be very unreliable, and can add considerable stress to personal relationships.
The best piece of advice we can give you is, to save three months worth of expenses in a savings account. This should give you enough time to react accordingly should any of the above events happen to you.
For more information, a great article can be found at the Globe and Mail at http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/the-perils-of-home-buying-without-a-rainy-day-fund/article4510259/