Mortgage freedom means developing a mortgage strategy

Photo: firstamericanrealtymedellin.com

A survey, commissioned by Bromwich+Smith and Advisorsavvy in 2022, found half of older Canadians (54%) have delayed retirement because of mounting inflation and the cost of living.

Four in 10 older Canadians have delayed (or plan to delay) their retirement because they have too much debt, while 62% have delayed retirement because they don’t have enough savings or investments.

Older Canadians were also asked about their retirement expectations and fears of possible scenarios including never being able to retire (63% were worried about this), running out of money after they retire (something feared by 71%) or having to go back to work to afford the cost-of-living increases (24%).

So is it alright to retire with mortgage or other debt? Yes, with a plan.

We all have “mortgage freedom” until we purchase our first home unless you are lucky enough to have the cash to purchase without the financing assistance of a mortgage lender. We all know that when we purchase our first home it will be decades before we have “mortgage freedom” again.

So what is “mortgage freedom?” Is it the day you make your final mortgage payment and get to have a mortgage burning party?

My definition of “mortgage freedom” is not only being able to retire mortgage-free or have the ability to be mortgage-free, you also having a source of income that will support the lifestyle that you have become accustomed to. Do you know how much you will need to enjoy a comfortable retirement? Does it seem unattainable?

When you obtain a mortgage, it is most likely the largest financial transaction of your life. Instead of focusing solely on the interest rate, it might be important to consider various strategies you can use within your mortgage that will assist you with your goal of “mortgage freedom” and “financial freedom” when you are ready to retire.

Having the same mortgage strategy your entire life is not always the best financial decision. If you are applying different mortgage strategies at different stages of your life, just like your other investments, it can lead to the financial wealth and the independence you are hoping for in retirement.

Your mortgage is the financial tool that is tied to your largest asset so whether you decide to pay off your mortgage early or keep your other investments liquid, having a strategy and using your mortgage like the financial tool it really is can help you have the retirement that you desire.

Whether you are refinancing or purchasing a home, you should not be walking away from your bank or mortgage broker without a strategy in place to accomplish your goals not only for the short term but also for the long-term and it shouldn’t look the same through every phase of your mortgage life.

Taking a mortgage simply because it has the lowest interest rate is not a strategy.

Ask yourself these questions: Do you manage your mortgage? Do you manage your equity? Or do you just leave everything alone for the next 25 years, sign your mortgage renewal without a full mortgage review at the end of each term and hope all will work out for the best?

My role is helping people develop and utilize the right mortgage strategy for their financial goals for now and for the life of their mortgage.

If you would like to have a mortgage review and discuss strategies for your mortgage for both today and the future please reach out. You can book a time for a no obligation chat here on my calendar. www.calendly.com/april-dunn or email me at [email protected].

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.