Monday, December 19, 2011
Tuesday, December 13, 2011
Do you need cash for your retirement?
7 Facts You Need to Know
… to help you enjoy a comfortable,
Chances are you’ve been dreaming about this moment throughout your working life—BEING RETIRED and having the time and money to:
But now that you’re over 60, you may have been caught off guard by the expenses associated with retirement, such as property taxes, rising energy and utility expenses, and the overall cost of living which seems to get higher every year. Sure, you have your pension income, but it may not be enough to make ends meet.
Most Canadian seniors have 80% of their assets tied up in their house. But accessing that equity can be difficult. Most banks won’t give you a mortgage because you don’t have enough income to make monthly payments.
So what are your options?
Well, you could downsize and sell your house. But isn’t that where you always dreamed you’d spend your retirement? Leaving the home where you raised your family, put down roots and made lifelong friends would be heart-breaking. Besides, selling and moving can be very expensive once you’ve paid real estate fees, moving expenses, legal fees, etc. There’s got to be a better solution!
You don’t have to leave the family home!
There IS a better solution, and for many seniors it’s a reverse mortgage.
A REVERSE MORTGAGE is a specialized financial product for people 60 and over who own their own home. It lets you stay in your home while benefiting from the value you’ve built up in that property over the years. Compared to a regular mortgage, a reverse mortgage can offer substantial monthly cash savings, so you have all the income you need to live the retirement of your dreams.
As your local mortgage advisor, I can introduce you to all the benefits of a reverse mortgage. However, since I’m not tied to any one lender or type of product, before recommending a reverse mortgage, I’ll do a thorough analysis of your situation, needs and goals. Only then will I make an unbiased recommendation about which product is right for you. In most cases, that will be a reverse mortgage. But I also have access to innovative lines-of-credit and other home lending products which may fit your specific needs even better.
Let’s see if you’re one of the vast majority of Canadian seniors who can benefit from a reverse mortgage. Here are the 7 facts you need to know:
FACT #1: Regular mortgages require you to pay a lender.
If you and your spouse are 60 or older and you own your home as your principal residence, you may be eligible to receive up to 40% of your home’s current appraised value in cash. The specific amount you’ll receive is based on your age, your spouse’s age, the location and type of home you have, and your home's current appraised value. No matter how much you receive, you never have to make monthly principal or interest payments (until you move), so you get the money you need without reducing your cash flow!
FACT #2: There are no income, asset, employment or credit requirements.
Since the amount you receive is secured against your home, qualifying is easy and hassle-free—even if you’re living on a very limited retirement income.
FACT #3: You can receive the money whichever way works best for your lifestyle.
With a reverse mortgage, you can choose a single lump sum payment or ongoing monthly, quarterly, semi-annual or annual income. You can even choose a lump sum to begin with, followed by ongoing advances over time.
FACT #4: A reverse mortgage can be used to clear up all your remaining debts.
Maybe you still have a mortgage remaining on your house and the payments are cutting into your lifestyle. Maybe you have monthly credit card bills piling up. A reverse mortgage can be the ideal solution. In most cases, you can use the funds to eliminate mortgage payments and credit card debts, and still have enough left over so you can enjoy life more and not have to worry about money.
FACT #5: Your income taxes and pension are unaffected.
As a retired person, one of your major concerns is how much you’ll be paying in taxes each year, since that can really affect your cash flow. Fortunately, the money you receive from a reverse mortgage isn’t considered income—even if it’s invested in an account or annuity with monthly withdrawals. This is because the home equity you’re accessing has already been taxed, since you purchased your home with after-tax dollars. Not only don’t you have to pay taxes on your reverse mortgage proceeds, they won’t bump you up into the next tax bracket. And since they’re not considered income, they won’t affect your Old Age Security (OAS) or Guaranteed Income Supplement (GIS) payments.
FACT #6: It’s ALWAYS your home!
You’ll never be asked to move or sell your home to repay your reverse mortgage, as long as you maintain the property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees. Your equity and estate is fully protected since the reverse mortgage amount can never exceed your home value. Sure, the equity in your home will decrease over the years as you receive payments, but your home’s value will likely increase even more quickly over the same period.
Generally, 99% of homeowners have money left over when their reverse mortgage is finally repaid (when you move or die). On average, the amount left over is 50% of the value of the home when it’s sold.
FACT #7: The interest on your reverse mortgage can sometimes be tax deductible.
If you use the money you receive to make non-registered investments such as GICs and mutual funds, the interest costs on your reverse mortgage can be written off at tax time. This can help offset the taxes you owe on your income, RRIF or RRSP withdrawals. If you’re considering this strategy, I can refer you to a trusted local financial planner.
There you have it—7 compelling reasons why a reverse mortgage may be the right solution for you! Not only will you have all the cash flow and security you need to accomplish your retirement dreams, you’ll continue to live in your own home and own it with much of the equity left intact.
The next step is
If you’re interested in exploring the benefits of a reverse mortgage, I invite you to contact me today at:
(778) 881-0276
As I said, the vast majority of seniors can benefit from a reverse mortgage. However, I wouldn’t be doing my job as an independent mortgage advisor if I didn’t also have other solutions to offer you. Once we’ve discussed your needs and goals, I’ll be able to make a fully informed, entirely unbiased recommendation that’s in your best interest.
For instance, if you simply want money for a vacation or new car, a reverse mortgage can be a very expensive way to get it. If you want the money for investments, keep in mind that the cost of the reverse mortgage may be more than you can safely earn. In cases like these, I may be able to tailor a home equity loan or line of credit to meet your needs in a much more cost-effective manner. The only way to know for sure is to talk to me today!
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