(NC) For many Canadian homeowners, their house
represents the biggest portion of their net worth. Now, increasing
numbers of seniors are starting to recognize the hidden value of their
homes.
The amount saved by baby boomers, as well as their
ever lengthening retirement prospects make finding additional sources of
income more necessary than ever. Did you know that as many as 50 per
cent of all seniors surveyed (by the Investor Education Fund) said they
believe their retirement savings will be exhausted within 10 years of
leaving the workplace?
Their concern is well justified as, according to a
2012 Leger Marketing study, 58 per cent of Canadians in their 50s say
they have less than $200,000 saved for retirement. Other surveys show
that as many as 59 per cent of retirees owe money to a lender, up from
only 40 per cent just two years ago.
So modest savings combined with the increasing costs
of servicing debt is making it imperative for seniors to look for ways
to enhance their cash flow.
“The solution for remaining financially independent
doesn't have to be as drastic as downsizing, selling the house, delaying
your retirement, or going back to work,” says Arthur Krzycki, a
director with the HomEquity Bank. “If you own a home it should remain
your security for the long haul and there are a couple of sound ways to
let your house pay back while you live in it.”
Empty-nesters, says Krzycki, might want to become
landlords, a viable solution especially if you live in a prime location
and have a separate entrance to available rooms, or to a basement that
can be turned into a self-contained apartment.
“Or, if you're not comfortable with strangers in your
home,” he continues, “why not access some of the equity with a reverse
mortgage? Based on the value of your house, this option gives you a
reliable cash flow to supplement your income.”
Here's how a reverse mortgage like a CHIP Home Income Plan could work for you:
• If you have reached age 55, you may be eligible for
the CHIP Home Income Plan. It lets you convert up to 50 per cent of the
equity in your home into tax-free cash.
• Unlike other loans on the market, there are no
credit or income qualifications and you are not required to service the
interest, or repay the principal until you choose to move or sell.
• It is also guaranteed that you will never have to repay more than the fair market value of the house at the time of the sale.
“While it almost seems too good to be true, CHIP's
increasing popularity is easy to understand as soon as you talk to our
clients,” Krzycki explains. “As many as 78 per cent tell us they would
recommend this kind of reverse mortgage to others as a good source of
extra cash in retirement.” Financial advisors and mortgage brokers have
details and additional information is also available online at
www.chip.ca.
www.newscanada.com
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