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Inflation and Your Retirement Plan: Could a Reverse Mortgage Be Key?

/in /by Rebecca

As inflation and the cost of living continue to rise, Canadians are looking to the future to adjust their retirement plans. An option for those above 55 that some are finding a viable option is a reverse mortgage. This financial tool offers a way to protect income, access home equity, and secure financial stability in uncertain times. In this blog, we’ll explore the potential of reverse mortgages as a strategic response to help against escalating inflation.

Inflation and Your Retirement Plan

Many families across Canada are finding it difficult to maintain their lifestyles as the price of essentials, like housing and groceries, climbs. In times like these, the purchasing power of a fixed income starts to diminish. This means that what people could afford on a fixed income a generation ago differs from what someone could get today, making it harder for people to enter retirement. 

While retirees of the past may have been able to travel or relocate to dream destinations, today’s retirees are finding it difficult. If you’re expecting a fixed income from your pension or other sources, especially one lower than your current or previous salary, you may feel financial strain. Even if you don’t have significant retirement savings or are dealing with debt, we’re here to help you take the pressure off and explore what options are available to you.

What Is a Reverse Mortgage?

A reverse mortgage allows homeowners above 55 in Canada to access the equity in their houses without selling. How much money you can get from the loan depends on your age, home value and the specific lender’s requirements. Once you have a reverse mortgage, there are no required monthly payments that you need to make, unlike a traditional mortgage. The lender may pay out the money to you in a lump sum or installments, which can provide you with a new source of income to achieve your retirement goals. 

Your repayment specifics will depend on the lender, but with most reverse mortgages, you can defer payment until you sell the property. 

How Can a Reverse Mortgage Help?

The key to how a reverse mortgage can help you in times of inflation is based on the equity that you have in your current home. Here’s how it can benefit you:

  • The income you receive from the lender is based on your home’s equity and not on the value of the Canadian dollar. This provides you with a source of income that won’t fluctuate with economic changes.
  • With no monthly payments required for a reverse mortgage, you don’t need to worry about increasing mortgage costs amid rising expenses for goods and services.
  • You can use the income from your reverse mortgage however you want— to help afford your essentials, pay for vacations, or make investments. 

Making Decisions on Your Retirement Plan

Planning for your retirement can be challenging and stressful, especially during economic uncertainty. Ensuring a stable and secure financial future can seem overwhelming as you navigate all the different factors you need to take into account. With 15 years of experience navigating the financial market while specializing in the needs of seniors, Seniors’ Lending Centre can help you plan for your financial future. Contact us today to learn how we can help you achieve stability and security in your retirement and if a reverse mortgage could be the right choice for you. 

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Rebecca

Rebecca Awram is a BCFSA-licensed independent mortgage broker with nearly 15 years of experience. She brings a wealth of financial and business knowledge from over two decades in software development, investments, and real estate. She holds degrees from the University of British Columbia, Douglass College, and Simon Fraser University. Rebecca is also an active member of the local Chamber of Commerce and CMBA-BC.

Specializing in senior mortgage solutions, Rebecca offers impartial, patient, and diplomatic advice combined with sharp negotiation skills when you need them most. She’s committed to finding tailored mortgage options for your unique needs, such as reverse mortgages, traditional mortgages, or home equity loans. Beyond her professional life, Rebecca loves everything outdoors, including hiking, backpacking, cycling and kayaking.

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