Retirement is all about security, and the best way to guarantee a comfortable future is with careful planning. Unfortunately, more and more Canadians are asking themselves not when, but if they are going to be able to afford their retirement, and for many, the answer is unsettling. According to a recent study conducted by the Investor Education Fund (IEF), a third of households surveyed don’t think they have enough saved, and a quarter just aren’t sure.
Using home equity to help fund your retirement is an option that most of us haven’t thought about. There are a number of ways to approach this possibility, but many Canadians don’t seem to be aware of their options. Even the most obvious method: selling your home, buying a less expensive one, and putting the difference into your retirement account, was only considered once or twice by 30 per cent of those in the IEF study.
Your Calgary mortgage broker is here to help you plan for your financial future. Whether you are thinking about adding to your savings through downsizing or another choice, like a reverse mortgage or a home equity line of credit, Mortgages by Candice can help you understand all of your options so you can make an informed decision.
Home Ownership Gives You Choices!
Many homeowners have purchased larger homes over the years as their family has grown. When your children move out and begin lives of their own, you might find yourself with a lot more space than you really need. Purchasing a smaller home can help you add to your retirement fund and save money on maintenance, heating and utilities. And, with today’s low mortgage rates, now is a great time to buy, and it’s never been easier to get started on the pre-approval process.
What If I Don’t Want to Move?
If selling the family home doesn’t appeal to you, there are still choices available. You might consider renting an unused portion of your house. The supplemental income from a tenant could be just what you need to make retirement more affordable. But being a landlord isn’t for everyone, and that’s where your Calgary mortgage broker can help with a reverse mortgage or home equity line of credit.
Reverse mortgages are designed for homeowners 60 and older. This type of loan allows you to turn your home equity into cash. A mortgage provider will look at how much your home is currently worth along with predicted growth to make a judgment about the value of your home in the future when your estate is settled. Benefits include:
- A lump sum, monthly payment or line of credit of up to 50 per cent of your home’s value
- The ability to save on taxes by putting your assets into other types of investments
- Flexibility to use your home’s value as you see fit.
- You remain in your home.
With a home equity line of credit (HELOC), you can gain access to the untapped potential of your home’s equity—up to 75 per cent of its value. Your Calgary mortgage broker can help you find a great rate and the best possible terms. With a HELOC:
- You can access funds like a credit card or receive a lump payment all at once
- Interest only accrues on the funds you use (and is frequently lower than a credit card or other consumer loan)
- You can pay off higher-interest debts, leaving you more of your retirement income to live on.
- You get to stay in your home.
Flexibility For the Future
When your home is your most valuable asset, why shouldn’t you put it to work toward your retirement? A home equity loan or reverse mortgage might not be for everyone, but these types of loan products provide options for those who might have started thinking about funding their retirement a little later in the game. It’s never too late to plan ahead, and your Calgary mortgage broker is here to help!
If you are considering selling your current home for a smaller one, Mortgages by Candice offers many resources to help you get started. Read 10 Steps to Becoming a Homeowner and our Mortgage FAQs or contact Candice today to get started.