Today’s seniors often face a predicament when it comes to accessing their wealth. After years of working to create a beautiful home for their family, all their money is tied up in the property. Now, that retirement is on the horizon, the upkeep of a family home for just one or two people can seem like an astronomical expense.
Many people hold onto their homes, uncertain of other options. But what if you could tap into the value of your home and better spread your wealth to live a more comfortable retirement? Many of those retiring now are cash poor and house rich. If you’re wondering if you’re in this situation, then ask yourself these questions:
- Do you wish you could access equity from your property?
- Do you want more cash to access a better quality of life in retirement?
- Are you thinking about downsizing?”
If you answered yes to any of these questions, read on, because you have plenty of options.
1. The reverse mortgage
Canada’s reverse mortgages spiked in popularity over the past two years with reverse mortgages growing by 43.32%. Reverse mortgages are available to cash-poor property owners (over 55 years old) as a secure way to access some of the value of their property without having to sell it.
Like any financial service, they are not without their risks, and it’s essential to know all the facts before signing up for one. We also recommend making sure that you deal with a trusted institution to make sure your assets are appropriately protected.
The benefits of a reverse mortgage allow you to access the value of your home, but the downside is that you’re effectively taking a loan out on your property at a much higher interest rate than usual. If a plan isn’t in place for repayments, this can quickly escalate, leaving homeowners in a precarious financial situation.
2. Move your family back in
Sometimes moving a son or daughter and their family back into your home is the easiest option. Not only does it help you, but it helps them. Often, young families are paying high rents elsewhere and might appreciate the opportunity to invest that money in a retired parent rather than giving it to a landlord.
Moving the family back in means you can fill back up those empty rooms and can continue living in the home where you made all those cherished memories. Also, rent installments will boost your retirement fund.
Occasionally, families will go the extra mile and work out a way for grown children to purchase the family home from their parents, in a way that is equitable to all parties. Of course, there are cons. Some homes aren’t set up well for multi-generational living. Or in some cases, there are no family members available or interested in the idea.
3. Have you considered a life lease?
Life lease housing developments are becoming increasingly popular in Canada. They are organized by non-profits that seek to build communities where seniors can live stress-free with the increased care and assistance required as they age.
Similar to condos, seniors lease the property outright, with the full amount returned to them or a benefactor at the end of the lease. The only additional payment is a small monthly fee that allows the non-profit to maintain the property and communal areas, fund events and generally make the neighbourhood a proper community for its residents.
One of the disadvantages of a life lease is having to sell the family home. Many retirees understandably struggle with the decision. Facing change can feel daunting, but often, this stage of life requires a pragmatic approach to finances, and life leases are just one of many options open to those looking to boost their retirement funds.
Find out more about Aspen Green’s life leases by clicking this link.