Everyone looks forward to their retirement days. You have put in 30+ years in the workforce, now it is time for you to do what you want to do. Travel, ski, golf, fish, take up a hobby, the list is endless.
Lets go back 20 years. You are working and making good money, maybe your partner is working, also making good money. You buy a house. make monthly payments on the house and after 10 years you refinance the house. Kids got to go to college, this is a way for them to go. So now you are back owing the same amount for the mortgage as you did 10 years ago. You may even refinance again for your children's weddings.
Another 10 years have passed and now it is time to retire. Your mortgage is not paid off and you just realized your pension isn't going to be a big as you thought. Your mortgage payments are eating all that disposable income you were going to fill your days with.
Remember the travelling, skiing, golfing, hobbies, that endless list.
So what does one do?
The wrong way to go--- I have seen this and it is tragic to see people do this. What they do is charge up their credit cards, if those get filled up, they go get more credit cards or a line of credit secured to their house. They live their life for a few years just like they planned to do it, except without the income they thought they would have. They are now living on CREDIT.
After a few years of juggling their credit card payments, mortgage and line of credit payments, their world comes crashing down on them. Sadly, their house goes into foreclosure, their credit cards get shut down and they have a pile of debt in their names. Not a great way to live out your retirement.
The right way to go-- If you recognize at the start that things must change, you will have an easier and happier retirement life, and we all want that. The good news is there are a few different ways to proceed to succeed.
1. Sell the family home and buy a smaller condo or home. This way the equity you do have in your family home and the increase in land value from the time you bought your family home may allow you to pay off the mortgage and also pay off the smaller dwelling. Leaving you mortgage free, with disposable income for your retirement. Or at the worst giving you a smaller mortgage payment with some disposable income.
2. Look into the Canadian Home Income Plan. (CHIP) Which is a reverse mortgage. With the equity in your family home, you may be able to pay off your mortgage or most of it, leaving you in the family home and increasing your disposable income since the mortgage payment will be paid or made smaller.
3. See if one of your children is interested in buying a house with a in-law suite. With the sale of your family home you and your child could share the mortgage payment. Or you could give them a portion of the proceeds of the sale of the family home, to pay for your in-law suite, which in turn will be the down payment your children will need to buy the home.
4. If your family home is big enough you could divide it into 2 suites. Living in one and renting the other one out. This will free up some of the disposable income that you want.
Whichever way you proceed make sure that you do make the decisions before you are in financial trouble. Because, once you are not making the payments on the mortgage, credit cards, or line of credit, your options because increasingly less.
If you need more information, give me a call or email me. You can check out my website by
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Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
Local: 1.250.650.4182
TFP: 1.888.679.0190
Fax: 1.888.679.0192
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