Whether you’re already retired, or are planning to retire, you may be considering ways to generate more cash to enjoy the retirement you deserve. Here are some ways on how your home can help you to pay for retirement.
Pay off Mortgage
Owing a home mortgage-free eliminates one of your biggest monthly bills. While you will still have to pay taxes, insurance and maintenance costs, people who pay off their homes by retirement no longer need to make mortgage payments or pay rent. Paying off your home makes it much easier to live on a limited budget. Source: Money.USnews
The most obvious way to use the equity or value in your home is to sell your home. Downsizing—you could even call it rightsizing—to a less expensive property may provide you with a place that suits you better and leave extra money for you to invest for income. Any extra money may impact your Centrelink benefits so make sure you explore all of the implications first.
You also need to be aware that when considering downsizing, a different house may not actually cost less. A smaller house closer to transport or amenities may cost as much as a larger home further away so you’ll need to do some research before selling. Source: Amp
Not for everyone, a reverse mortgage is a way retirees can get equity out of their home and have a stream of revenue to live off of. Ideal for people who don’t want to leave their home to their heirs, a reverse mortgage gives you back your equity in a lump sum or in installments. Keep in mind that if you can’t pay back the loan, get sick and are out of the house for more than a year, or your heirs can’t pay back the debt, you could lose your home. Source: Investopedia
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Gary Wong, MBA
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