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RISING WOMEN EXPERTS...
My retired parents own their home, have a small mortgage and a few
other loans. They would like to consolidate their debts and access some of
the equity in their home so they could travel more. What options are
available to them?
By Kim Turner of Invis
Seniors are the fastest growing segment of the population. They are
living longer, saving less, spending more and carrying more debt.
House-rich, cash-poor retirees have four options if they want to draw wealth
out of their homes. Each choice has its pros and cons, and each suits a
different type of client:
Downsizing - Remember downsizing means cheaper, not just smaller. In order
to access the equity in their homes, retirees must sell it, pay off all
debts, purchase a smaller, less expensive home and invest the balance.
Renting Out Space - Things to consider with this option would include:
impact on lifestyle, landlord/tenant relationships, and loss of privacy.
Estimates of rental income should be realistic and the impact on personal
taxes and continuation of benefits should be understood.
Secured Line of Credit - Eligibility: No age restrictions; proof of income
and good credit required. Amount: Up to 80% of value of home. Repayment:
Usually interest only on amount in use. Principal amount owing does not
increase. Debt can be paid in full any time without penalty.
Reverse Mortgage - Eligibility: All homeowners must be 60 years and older.
There are no medical, income or credit qualifications. Amount: Up to 40% of
value of home based on homeowner’s age. Repayment: No regular payments are
required. Principal amount owing increases over life of mortgage. The amount
to be repaid is guaranteed not to exceed fair market value at the time of
sale. Debt can be paid at anytime but with penalty.
Making a financial decision that involves the family home can be a very
emotional and stressful time. For retirees, it comes at a time when
everything is uncertain from less income, getting sick and who will take
care of them. In addition to listening to the opinions of friends and
family, now is the time to seek the advice of professionals such as real
estate agents, financial planners, accountants, lawyers and mortgage
brokers. It is important the person you deal with is educated, knowledgeable
and professional. Be sure to ask the person you are dealing with what
qualifications or designations they have.
For advice on the retirement options, contact Kim Turner, AMP (Accredited
Mortgage Professional) at Invis, at 403.560.2247 or visit
www.kimturner.ca
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