The Freedom 55 Reality Check

Wendy Musselman
Wendy Musselman
Published on July 13, 2021

The country’s best financial planners and most retirement forecasting models never could have predicted the COVID-19 pandemic and its financial impact!

The ultimate financial motivation for seniors is to live life their way but for many this will not become a reality without the guidance of a trusted Realtor, Financial Advisor and a well thought out retirement/legacy plan.

One financial goal for seniors must be cash flow flexibility to handle ‘life what ifs’.

In many cases the 55 plus cohort have young adult children that are suffering financially, aging parents that are financially ill-prepared for retirement, and possibly grandchildren in need of financial assistance.

The 55 plus cohort need to assess and identify viable options to access their home equity so they can minimize the financial vulnerabilities.

 ‘Life What Ifs’

  • Short and long term health crises
  • Major home  renovations  (for accessibility)
  • Purchase investment property or assist children and/or grandchildren to purchase first home
  • Divorce or separation
  • Supplemental income requirements
  • Right-sizing  or relocation

Alternative financing options offered by a trusted financial advisor can:

  • eliminate  the need to cash out investments, which could trigger Old Age Security(OAS) claw back or tax liability;
  • pay  monthly withdrawals without servicing the debt;
  • assist  in new home purchases and property investments;
  • complete  a home purchase to live without mortgage payments,
  • supplement retirement income.

Home Equity Line of Credit (HELOC) has been an option many have used in the past. There may soon come a time when Canadian banks tighten access to these loans to cope with the economic impact of COVID-19.

With this option gone, other avenues can be pursued.

Reverse Mortgages

They are designed for the 55 plus cohort and eligible for up to 55% of the loan to value (LTV) ratio of your home. Instead of a regular reoccurring debt servicing schedule, the interest on the debt is capitalized and accrued. No payments are required until death, default or sale of the home. You receive the money tax-free, so it doesn’t affect OAS or other government benefits you may receive.

Fraction Mortgages

Just like a reverse mortgage, it allows you the ability to stay in your home without the need to service the debt.  You can gain up to 40% LTV without any age restriction, however the terms are in 5 y ear increments only.  At the end of the 5 years you have a one-time draw down and the option to renew for another 5 year term, sell the home or refinance with another lender.

All-in-one Accounts

Focused on the 55+ cohort, these all-in-one accounts can combine a mortgage, a revolving secured line of credit and full service daily chequing account. You can secure access to up to 65% LTV, however there are stricter underwriting guidelines, making approval more challenging. Your debt does not require servicing.

As a Licensed ASA Realtor® I have access to a Network of Specialists that can help meet your needs.  Reach me at  519-890-1985 or [email protected]

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