Do you know that a lot of Canadian seniors feel that they cannot rely on just their pension after their retirement? As many as 8 out of 10 surveyed seniors feel that pension plans alone are not enough for them to have a comfortable retirement and are keen to find more ways of making sure that they can have better finances during retirement. A lot of the respondents are homeowners who are open to the idea of using their home equity as part of retirement planning but are not willing to sell their current home to downsize and are not planning to let go of their current home for any reason.
If you are one of the Canadians who are seeking ways to use your home equity as part of your retirement planning, then you are in luck today, as there are several ways for you to achieve that while still keeping your home. If you are not planning to sell, know that your options go beyond just getting a reverse mortgage. Even in retirement, you can take out a HELOC or a second mortgage more so if you are planning to use your home equity to help generate post-retirement income such as in the case of planning to purchase a rental property or choosing to invest in another property.
Selling Is Not Your Only Option
A lot of seniors feel pressured that they are expected to let go of their homes and simply ‘downsize’. Some people may not be willing to do this because they want their family to still have the original home for years to come. Some may want to stay in the same home because they have an emotional attachment to it. No matter what your reasons are for not selling your home to access your home equity, all are valid and there are workarounds for you to enjoy the fruits of your labour whilst keeping your home. Aside from a reverse mortgage, you can opt to get a HELOC or get a second mortgage even after retirement.
The common misconception is that a person needs to be employed to apply for a home equity loan, but the main requirement is to simply have home equity. With this said, if you qualify for a home equity loan or a HELOC after retirement or near retirement, be aware that you still have to pay the loan in the future to avoid losing your home. This can be addressed with smart financial planning and only using the funds from your home equity loan as a supplement or a possible emergency fund – to be used only when necessary or when using it can pay off in the future such as in the case of investing.
Are you near retirement or already in retirement and need assistance with tapping your home equity in 2021? Contact us today and we will be happy to answer your questions regarding this and any other concerns that you may have.