Still having a mortgage that you and your spouse need to pay off after you have retired isn’t ideal. Unfortunately most mortgages do run anywhere from 25 to 30 years before you can completely pay it off. This means that if you took out a mortgage when you were 35 or 40 years old you could end up paying up to or beyond your retirement age.
Most senior citizens don’t have the means to pay off that amortization simply because they do not have jobs or income streams to sustain them. They may have pension proceeds, but this is usually hardly enough to cover daily expenses such as food and medicine. So what are your options as senior citizens?
The answer is reverse mortgage.
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A reverse mortgage is a type of mortgage that is only available for seniors in Canada aged 55 years old and above. With this type of mortgage, you will no longer need credit checks or income requirements. You will not need any monthly repayments. Other advantages of a reverse mortgage are as follows:
1. You can keep living in your home – if you want to keep living in your home instead of moving into a retirement home, you can still do so. Canadian laws protect you from being forced to move out or to sell your home if you are using the reverse mortgage. You will still have ownership of your home until such time that you want to sell it.
2. Your loan balance will not exceed your house’s fair market value – even if the market keeps on fluctuating and changes in interest rates occur, your loan balance will never exceed the fair market value of your home. You will not be charged anything extra to offset losses in the market.
3. Have access to up to 50% of the value of your home – where else can you find that you can have as much as 50% of your home’s value to use for other things such as medical treatment? A reverse mortgage lets you take out that much money. Best of all, its tax free.
Some people prefer to cross the bridge when they get there. These are the people who would most likely need the reverse mortgage at a time when they are no longer able to pay for their regular mortgage. Other people like to prepare for the worst and save up their money to pay off their mortgage as soon as possible. The latter scenario is always ideal. It is best that you take care of your debts while you are young and able. You should save up for today to make sure your future can be lived without debts and worries.
Your sacrifices today can give you true financial freedom in the future. Before signing up for any mortgage, make sure to plan on how you are going to pay it off. Factor in your age and your current status to all your mortgage plans. Create a mortgage early on with your retirement in mind.
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