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How To Fund Your Retirement Using Your Home

How To Fund Your Retirement Using Your Home

Older couple gazing into each others eyes thinking about retirement

Older couple gazing into each others eyes thinking about retirement

First off, I just wanted to say congratulations that you’re thinking about or looking into retiring. Retirement is a huge milestone, and I want to ensure the stress of your finances isn’t taking away from your excitement that you’ll have more time in the day to do whatever you would like without pesky work getting in the way.

Your home is the most valuable asset which you can use to fund your retirement. If you purchased a home before the recent housing boom, you’ve likely earned a significant return on your investment. Are you thinking of downsizing? Getting a vacation home? Or possibly just moving down the street into a condo? The equity nest egg you’ve built for yourself could be the key to financing the retirement lifestyle you’ve been dreaming of and these are a few simple ways to use your existing homeownership to garner a little extra cash once you’ve retired.

Sell your home and rent (for now or indefinitely)

The easiest way to make money from your home is to sell it and put the proceeds towards renting instead of owning it. As the current housing market continues to be on the rise, selling off your home, provided you’ve made headway on your mortgage over the years, can give you a big chunk of profit. It may be scary to sell your home without buying a new one, but it’s now time to think a little differently about money. Make sure you have a well-researched investment plan in place so you can spread the money made from the sale over the years to come as it will essentially become your income source. It’s amazing how quickly a million dollars can disappear if you invest your money poorly or not at all.

If you’re thinking of retiring 5 or 10 years from now, remember that the real estate market constantly fluctuates. Although your property is an asset, it always comes with risks. You may think your home is worth more (or less) than buyers in the market, so get an appraiser or a realtor to estimate how much you’d be able to sell your home for on the market today. That way you have an idea of how much you would need to pay off your mortgage if you still have one and how much you can use to fund your retirement adventures.

Downsize your home. Why clean empty rooms?

Before making the decision as to where you will live next after selling your family home, you have many options to look at. It likely doesn’t make sense to move from a 4-bedroom home to a 4-bedroom home at this stage in your life. Do you need all the extra room now that your kids have moved out? Large homes are more costly whether you’re thinking about property taxes, utility bills, or the hours spent cleaning the rooms that never get used. Moving to a smaller home, apartment, or condo will allow you to have less stress from the upkeep, and more money in the bank.

Rent out your home while you vacation.

Are you a snowbird? Or do you like to go on month-long excursions? You deserve time for relaxation and adventure now that your retirement allows you to have more free time on your side. Why not make a profit to fund your vacations by turning your home into an Airbnb, or by renting it out to family and friends while you’re gone?

Get a Reverse Mortgage / Home Equity Loan

A reverse mortgage is a loan available to homeowners 62 years of age and older, which allows them to convert part of the equity in their home into cash. As opposed to making monthly payments towards your mortgage, your lender makes payments to you. This payment is a type of “loan” until your home eventually sells, whenever that time may come. This type of “early equity bonus” is perfect for retirees with no plan to vacate their home, as it gives them extra cash flow with no limit on when it needs to be paid back to the lender.

Essentially, you’re borrowing against your home, depending on how much your home is worth, your age, and interest rates. You will pay interest on this loan, similar to a mortgage. Even if you don’t have a mortgage, meaning that you own your home outright, you can still use the equity in your home to free up some money, which you can use for a vacation, investment, or as a deposit on a retirement villa. The options could be endless as to what you spend it on.

Work with a reputable mortgage broker and financial advisor to ensure you get the lowest interest rates and the best cash flow plan.

You deserve some serious “R and R” during your retirement, and the stress of your finances shouldn’t impact that. If you have any questions or concerns about financing your retirement, or you would like to learn how to use your home to create extra financial comfort, don’t hesitate to give me a call at 705-315-0516. I am always happy to help you better understand your mortgage options to ensure you enjoy your golden years of retirement.

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