Homeowners in Canada often have a considerable amount of wealth tied up in their homes. As you approach retirement you may find that you are “house rich and cash poor.” While owning a valuable property is an achievement, much of your net worth is equity in your home. Rising inflation coupled with market volatility may have you worried about your retirement savings. Securing a Home Equity Line of Credit (HELOC) before retirement, while you still qualify easily with your employment income may be a solution.
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Stay in the Home You Love
The dream of homeownership is something many aspire to, but the costs of maintaining a home can sometimes be overwhelming, especially when retirement approaches. With a HELOC, homeowners can access the equity they’ve built up in their home without having to sell their beloved property. This financial flexibility allows you to stay in the home you love, maintaining the comfort and familiarity you value.
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Save Unnecessary Taxes
Retirees and pre-retirees facing a cash crunch may be tempted to tap into their Registered Retirement Savings Plan (RRSP) or liquidate non-registered assets. However, both of these options can have significant tax implications. The resulting tax bill could be much higher than the cost of interest on using their home equity. A HELOC provides a tax-efficient way to access funds, ensuring that you can supplement your retirement income or can pay for unexpected expenses without unnecessary financial penalties.
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Extend the Life of Your Portfolio
Depending on where you live, the value of your home may have risen exponentially over the past decade. A HELOC can provide a simple way to diversify your income sources. By drawing income from both your property and investment portfolio, you won’t need to rely as heavily on your investments. This approach can help extend the life of your portfolio, ensuring your financial security throughout retirement.
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Pay It Forward
Many retirees may have children or grandchildren, and they may want to provide financial support now rather than transferring assets through their will. HELOCs make it easy for them to access the equity in their homes, providing an opportunity to offer cash gifts to loved ones. It’s a way to experience the joy of giving.
In conclusion, securing a Home Equity Line of Credit before retirement can be a game-changer. It not only allows you to stay in their cherished homes but also provides financial flexibility, tax efficiency, and the ability to extend the life of your portfolios. Additionally, it opens the door to the joy of giving, creating lasting connections with their loved ones.
As a mortgage broker dedicated to ensuring your financial well-being, it’s important to explore the options that a HELOC can provide.
Hi, I’m Jill, your mortgage pro. I am here to make the world of mortgages less confusing so you can feel confident in your financial decisions. Through my blog, I aim to provide you with the knowledge and guidance you need to make informed decisions. Your financial peace of mind is my top priority.
