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Sunday, September 10th, 2023

Pay off your Mortgage Before you Retire – From your Friendly Vancouver Mortgage Broker

Pay off your Mortgage Before you Retire – From your Friendly Vancouver Mortgage Broker

Adil Virani Vancouver Mortgage BrokerBack in the old days, most people had planned to pay off their mortgage before they retired. Times have definitely changed and if anything the reverse seems true in today’s climate.

The baby boomers could be facing some rough waters ahead if they plan to carry their mortgage into their retirement years. StatisticsCanadasays that we have almost 9.3 million people who are over the age of 55 and reports that almost 43% of this same age group does not have enough money socked away for their golden years.

Another concerning trend is that almost one quarter of all people who have mortgages will be carrying that mortgage when they retire. A worst statistic to consider is that people who are retiring are actually racking up a debt load that is 3 times higher than the average Canadian.

Far too many people plan on surviving on their Old Age andCanadapension Plan payments when they retire. Combined, this roughly averages out to about $13,000 per person providing they qualify for the maximum payment.

A couple might squeak buy on this amount of income, but it could be a challenge. And, if you’re a single person and carrying a mortgage, your boat is riding low in the water and any unexpected financial expense could risk sinking you fairly quick.

Although the situation is not as dire as it might seem, there are some reasons to be concerned if you plan on carrying your mortgage into your golden years. Most people who will be retiring with a mortgage are relatively secure financially and have will have an average combined income of around $46,000 per year.

Currently the average mortgage going into retirement will be around $87,000 and at current interest rates, that works out to about $411 per month on a 5 year fixed mortgage. Those who do have some financial savings will weather a hike in interest rates relatively well.

Potentially problematic are those people who do not have any retirement stashed away and might still be carrying a mortgage. The reason is because any hikes in interest rates, even a small one, could spell seriously financial trouble for those individuals who don’t have any retirement savings.

If you are at the lower end of the retirement spectrum, you also have to factor in the additional costs of home ownership such as property taxes and costs to maintain a home. These folks could find themselves to be in a dire financial predicament if they’re not careful.

Many Canadians are already planning to continue working past the age of 65 and are hoping to maintain their level of income by working longer. Another strategy that is being suggested is that if you can, you should lock in your mortgage into a 5 year term if not longer to avoid interest rate hikes.

Another strategy that seniors can employ is to extend your amortisation period to 30 years which will allow you to increase your amount of available cash. The experts also suggest that you access the HELOC (Home Equity Line of Credit) to have extra money available so you have it if you need it.

The best advice that this Vancouver mortgage broker can offer, especially if you’re still young, is to pay off your mortgage before you retire.


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