Questions?
(NC)—When Liz and Robert retired a couple of years ago, they were confident they could continue to service their mortgage even on their reduced income. Interest rates were low and heading lower, so their variable rate mortgage looked like a great financial decision. With interest rates reversing their long decline, the retired couple noticed that their mortgage payments increased, while their income did not. At first, they covered the increased payments with their existing line of credit; however, they were unsure how they would afford their payments if rates continued to rise. After considering options like selling their home and downsizing, returning to the workforce, or acquiring more debt at age 67, they met with their financial planner to seek his advice. He suggested making their home work for them with a CHIP Home Income Plan.
A reverse mortgage, like a CHIP Home Income Plan, allows homeowners 60 and over to
access up to 40% of the equity locked up in their home, tax-free, without the obligation to repay until they chose to sell their home or move.
Liz and Robert used the home equity built up in their home to pay off their mortgage and the line of credit, instantly improving their cash flow. They also used the extra cash to create a modest investment portfolio that would serve as an emergency cash reserve.
“I feared having to sell our home and come out of retirement to work again so we could pay off our increasing debt,” says Robert. “With the CHIP Home Income Plan, we are able to stay in our home with the peace of mind that our finances are taken care of.
Since regaining their financial stability, Liz and Robert have enjoyed a worry-free retirement, saving the remainder of their home equity for a rainy day.
www.newscanada.com