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Buying a Home in Retirement & What You Need to Know

Buying a Home in Retirement & What You Need to Know

couple talking about retirement and mortgages


couple talking about retirement and mortgages

Retirement is a time in life that we all dream about. The day we can quit our job, celebrate with a big party and kick back and relax for years to come. The idea of retirement might make you think of spending your days cozied up with a few good books, long walks with the dog and your significant other, fishing every day, or endless playdates with your grandchildren. Whatever the word retirement makes you think of, perhaps where you will live is on that list. Do you want to retire on the beach as a snowbird? Do you want to downsize your home and buy a small house that is more manageable to upkeep? Perhaps your mind drifts to thoughts of buying an income property so you can live in one unit of the house and rent the other to subsidize your income. To help you envision what your retirement will look like or to help you decide if now is the time to buy the home you will retire in, I have put together a few questions you will want to think deeply about. If you want to learn what options might be available to you to buy a home now or in the future, don’t forget, I’m only a phone call away. As an experienced mortgage broker and financial advisor, I have a unique ability to help you review your finances, options, and to make a plan as to how you will achieve retirement while securing the mortgage you need to own the home you’re dreaming of.

The best starting point might be taking a look at how much of a mortgage can you afford.

If you are looking at retiring soon, you will want to compare what your regular income looks like now (with a regular paycheque) and what it will look like after that retirement party. Will you pull from your investments to fund your lifestyle? Will you sell your current home and keep part of the profit in a retirement account to draw from? Now is also the time to look closely at your current budget and what you might want to change in that budget so you can spend your days of retirement exploring the world or simply enjoying a quiet lifestyle. Once you figure out what your monthly income might look like, click over to my mortgage calculator and enter your numbers into it to find out just how much of a home you can afford in retirement.

Should you buy a duplex for extra income?

When you retire, you typically don’t have a steady paycheque to rely on for income as you are no longer working. Some people opt for a part-time job to keep them busy and to ensure they have a little extra fun money to pad their wallets. Others who have invested steadily through their working career might have RRSPs they can roll over into RRIFS to draw from on a regular basis. If you didn’t have a chance to save as much as you would have liked for retirement, you might be wondering if buying a property that is a duplex is the right retirement income stream for you. Granted, it can come with its own headaches but having someone else pay the bulk of your mortgage each month with a little leftover at the end of the month would be nice too. The question here is, do you want the responsibility of being a landlord at this point in your life?

Should you rent instead of buying a home in retirement?

If you have lived in your home for many years and perhaps even have paid off your mortgage in full, you have a financial choice to make. Should you live in you that home which may be too large for you to upkeep, sell that home and buy something a little smaller that makes sense for your lifestyle now, or do you sell and simply rent a home or condo in an area you would enjoy? Owning a home has its own expenses, many repairs to make over time, and taxes to pay in addition to utilities, etc. If you were to sell your home in today’s hot real estate market, you could take the profit from the sale, invest it wisely and rent a smaller apartment, condo, or even a house. If you did decide to rent instead of own your home in retirement, it might mean you suddenly do have a nest egg to enjoy in retirement which you wouldn’t have owning your home. It could also mean that you no longer have to worry about cutting the grass, shovelling the deck, or paying utility bills – assuming the place you rent is inclusive of those costs.

Is a vacation property a better investment?

If you have thought about retiring on the beach or travelling widely, you might investigate buying a vacation property in the south or perhaps a cottage property in Muskoka instead of a home in a city neighbourhood. It all depends on where you want to spend your days and what you would do in the off-season as well. Could you buy a cottage on Georgian Bay that you can drive to without needing a boat to get to it? That could work for you year-round. Do you opt for a cottage that you do need a boat to reach because you like being surrounded by water in your own little oasis? If your cottage was boat access only, what would you do in the winter months when the ice sets in? Would you rent something on the mainland for those months? If you bought a condo in the south, would you enjoy your winters as a snowbird and your summers travelling; knocking things off your bucket list? These are all lifestyle decisions you will want to think long and hard about before jumping in with both feet.

Do you want to buy in a retirement community or in a family-friendly neighbourhood?

When we retire right away, we might think about sand between our toes and the waves crashing at our feet as we stroll along the shoreline lit by moonlight. However, long term would you get lonely? If you need a little extra care or assistance with things around the house, you might look at buying a home in a retirement community. Some operate much like a condo where you have a full home but your lawn care is taken care of for you. There might be entertainment in the main lodge you could partake in with the option to have in-home care later in life when needed. All important things to consider if you are thinking of buying another real estate property and securing a long-term mortgage to go with it.

Does a condo make more sense than a home?

If you are the type that takes pride in making sure the grass is cut on a perfect 45-degree angle with beautiful stripes that make the neighbours green with envy, you might not be the condo type. However, if you loathe maintaining a home, landscaping your property, cutting grass, and doing odd jobs around the house, buying a condo might make sense for you in retirement. Yes, you would likely pay a condo fee in addition to your mortgage for the condo but it means you have someone else around to fix things and to care for everything outside your door on a regular basis. Some condos even include amenities like a golf membership, swimming pools, and restaurants; giving you a full resort-like experience.

As you can see, there are many options when it comes to deciding where you will live in retirement. Whether you want to own your home or you want to lease a property. If you’re ready to look into the crystal ball of the future and make a plan for your retirement, give me, Darren Robinson a call at 705-315-0516. Together we can review your finances, your retirement savings, and your mortgage options so that you can make a well-informed decision about the real estate you want to buy, sell or repurpose into an income stream.

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