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At Eastport, we aim to be your keel, as on a boat – your point of balance, giving you directional stability. We help you get beyond thinking of money as the deep and unpredictable water you’re in. With our knowledge as your ballast, money can be the body that buoys you, propelling your good and purpose-rich life.

Retiring with mortgage

Things To Consider When Retiring With A Mortgage In Canada

While retirement is a time for celebration it is also a time for reflection. Ideally, upon retiring we all want to enjoy life to the fullest, especially, after all the years of hard work and sacrifices we have made. However, all of this isn’t possible if you are getting close to retirement but still have substantial debt.


Having mortgage payments, for example, hanging over your head after you’re retired can make living that dream retirement lifestyle a lot more difficult. In recent years, current home prices and interest rates have soared which has made effective mortgage planning and financial planning essential.

Luckily, there are several methods to help manage mortgage payments upon retirement. Strategies such as downsizing or reassessing and reprioritizing finances, can all impact how much debt you still owe when entering retirement.

To help you make the right decisions here are some of the top things to consider when retiring with a mortgage in Canada.


5 Things To Consider When Retiring With A Mortgage In Canada


1. Plan Ahead By Prioritizing Debt Repayment

While there are ways where you could effectively manage your mortgage payments even after retirement, it would be a lot smarter and more convenient if you were proactive with your financial planning and pay off your mortgage before you retire.

Your primary goal should be to pay off your mortgage completely, so it’s best to find ways to do just that. With no more mortgage payments, you can use the same money to put into your retirement savings account, ensuring your retirement is even more comfortable.

Also, with the mortgage gone and your retirement income increased, you’re free to enjoy your golden years without having to give up a significant amount of money in mortgage payments every month. All of that money can go into sustaining your quality of life.

If your mortgage plan allows for you to make balloon payments, then try to make as many payments as you can in one go. This will bring down the monthly payable, giving you more breathing room before retirement.

Another benefit of having no mortgage is that your house is pure equity, giving you a source of funds during your retirement should you ever be in need.

If you’re not in a position to pay off your mortgage before retirement, then you should still be proactive about being able to manage your mortgage payments.

Scrounge up whatever savings you can and put them into a retirement savings account, like a registered retirement savings plan (RRSP).

The more you put into your account, the more money you have available to you upon retiring, which can then be used to pay off any remaining debt.


2. Reassess Your Mortgage Payments & Other Finances

If you’ve got a mortgage to worry about during your retirement, then it's best to start reassessing your finances.

Firstly, list down all your debts and see which ones you can pay off as soon as possible. If you’re unable to pay them off, then you might want to consider consolidating your loans. This can reduce the amount you’re paying in debt service costs and high interest charges, which can save you a significant amount of money in the long run.

Next, it is time to assess your budget in detail and see where you can cut costs. For example, if you are going to no longer need a car after retirement, then you can sell your vehicle which can provide you with a much-needed cash injection.

The money can be used to make a balloon payment under your mortgage or added to your RRSP to help you increase your retirement income. At the same time, you will save money as with no car you won’t have to worry about fuel or maintenance costs.


3. Generate More Income Streams

If you have to pay a mortgage with your retirement income you need to find additional sources of income to live the retirement lifestyle of your dreams.

Starting a home business is one idea, but if you’re looking for a more passive form of income, many people consider renting out extra rooms in their homes.

You can also look for part-time jobs or work in the service industry at your own pace for additional income to offset your mortgage payments.


4. Downsize Or Rent After Retirement

Downsizing is another great way to save money and generate income to pay off debt after retiring. While a bigger home is ideal for Canadians raising a family, after the children have grown up the need for all that additional space declines.

In such an instance, selling your home and moving to a smaller home or an apartment can leave you with a substantial sum of money not only to pay off debt but also to live the retirement lifestyle you have always dreamed about.

Another method of downsizing is to put your entire house up for rent. The rental income you generate can be used to pay off the rent for a smaller home or apartment for yourself while some of it can be used to pay off your monthly mortgage. A smaller home is easier to manage and less expensive to maintain which can be beneficial in the long run.


5. Restructuring & Reverse Mortgages

In some cases, your mortgage lender can allow you to restructure your current mortgage. If you are worried that your monthly mortgage payments will be difficult to manage upon retirement you can take advantage of the opportunity by extending your mortgage term.

By increasing the term of your mortgage you would have to make payments for a longer duration but the increased term will reduce the amount of your monthly payments making it more manageable with your limited retirement income.

The same is the case with reverse mortgages. If you are over the age of 55, a reverse mortgage can allow you to sell the equity of your home without you having to sell it. In some instances, you can borrow up to half of the current value of your home tax-free.

Before opting for such options it is always advisable to first consult with an experienced financial advisor.



Speak To A Wealth Management Expert Or Financial Advisor To Learn More About The Challenges Of Entering Retirement With A Mortgage!

Retirement planning in Toronto can be difficult, with house prices, inflation, and interest rates soaring to record-breaking heights.

So, when it comes to mortgages and retirement, consulting with a financial expert is the first thing you should do.

Our wealth management experts at Eastport Financial Inc. can tell you the best ways to manage your mortgage payments while also helping you consolidate your debts or restructure your mortgage plan. With our effective financial planning strategies we will find you the best deals and strategies to lower interest rates, monthly payments, and debt service costs.

For more information contact us at 902-474-5433 or email us at info@eastportfinancial.com

You can also visit us at our Halifax office located at 371 St. Margaret’s Bay Road, Suite 201, Nova Scotia.

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