As a mortgage broker, I understand that for many people, the goal is to pay
off their home before retirement, or at least significantly reduce the
mortgage balance. The idea is to eliminate that monthly payment so you
can enjoy a more relaxed lifestyle once you retire. However, what often isn’t
fully anticipated are the other rising costs—things like property taxes,
utilities, and of course, the ever-increasing prices of food and healthcare.
These expenses can really add up, and when you’re living on a fixed
income, like a pension, it can feel like your money just doesn’t stretch far
enough to cover everything comfortably.
While the mortgage might be gone, you’re still faced with these ongoing
costs that can put a strain on your retirement budget. And for many, the
idea of downsizing or selling their home just isn’t an option—there’s an
emotional attachment to that space, or maybe they don’t want to leave the
community they’ve built. In BC, there is also a significant cost to buy and
sell due to realtor and legal fees and of course the land transfer tax.
For example, if you sold your home in Kamloops, BC for $650,000 you can
expect to pay approx. $22,500 in realtor fees (there is no realtor cost for
you to purchase a new home however). Now let’s say you down size and
purchase a strata property for $450,000. The land transfer tax will be
$7,000 and legal fees will be approx. $2500. Therefore, in this scenario,
the cost to downsize would be about $32,000.
But here’s the good news, we now have several lenders in Canada who
can offer a reverse mortgage to allow you to use the equity in your home to
either take out either a large lump sum payment or a monthly amount to
augment your income.
By using the equity in your home, you can avoid monthly mortgage
payments and live your retirement more comfortably. When you decide to
sell your home, you’ll pay out the amount you borrowed along with the
accrued interest. Because you can never use more than 55% of the homes
value to borrow against, you will still have equity in the property when you
sell your home.
Another cost saving option may be to check with your municipality to see if
you can defer your property taxes until you sell your home. This often
saves thousands of dollars per year for seniors.
At the end of the day, it’s about finding a balance between holding on to the
home you love and making sure your financial situation is sustainable.
There’s no one-size-fits-all solution, but by considering a combination of
these options, I can help you find the right approach to stay in your home
while also managing the rising costs of living in retirement. Let me know if
you’d like to learn more about reverse mortgage options – I would be happy
to show you the options that are available!