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