Have you worked hard your entire life, saving money and building a solid pension for your Golden Years? Now, you might want to see which mortgages are available for pensioners.
Owning your home can give senior citizens many benefits, which we will discuss. Also, we will review government programs and private financing. Afterwards, we hope you will be able to find the best mortgages for pensioners.
Can Seniors Get Mortgages?
First things first - Can pensioners get mortgages?
Since housing loans are primarily based on income, assets and credit scores, the answer is Yes. Actually, it is illegal for lenders to discriminate against you based on age (senior) or status (pensioner).
Just like with other applicants, lenders will look at your assets, credit history and income. Instead of your regular working income, your pension income will be considered.
Pensioner Housing Needs
Who doesn’t want their own home? You can do with it as you like. You don’t have to worry about crazy landlords changing the rules. Don’t you deserve the stability that home ownership provides?
Due to your maturity in repaying loans, lenders are more likely to see you as responsible. Here are some of the primary issues to consider when looking at a mortgage for a pensioner:
- Time Period
- Monthly Repayment
How long do you want to be repaying your housing loan? Thankfully, our Canadian mortgages have shorter five-year mortgage segments amortized over 25 years. This gives us more options.
How much can you afford as a monthly payment? Your fixed pensioner income might create a tighter budget than when you were working.
Unfortunately, old age can lead to more aches and pains. You might want to add some bathroom floor heating or a larger bathtub, which can be easily accessed. If you become disabled, you could add elevators and ramps to your home.
You can’t teach an old dog, new tricks.
Another possibility is downsizing - you might not want to mow a large lawn. Or, you could refinance to fix up the estate. Pensioner mortgages can help you fund remodeling, downsizing or other housing improvements.
And finally, home owners retain independence. Change your living space to your exact specifications. Your grandchildren can visit and feel at home. Owning your home allows you to enjoy your old age on your terms.
Pensioner Home Finance
Will Dunning of the Canadian Associated of Accredited Mortgage Professionals said that for homeowners aged 65 years or older - “35% have a mortgage.” Simply because you start to receive your pension, does not mean that life has ceased; all that has changed is your work status.
Have you ever noticed how many sports cars are owned by seniors?
When you are young, you might not have much money. When you are a pensioner, you might be able to splurge on an imported Italian two-seater or your dream home. In fact, pensioner home financing is becoming the norm; in Vancouver – “real estate accounts for 55% of the average household’s net worth, and 65% of the average household’s assets before debt is deducted.”
Another reason for pensioner mortgages is to help family members. Mr. Dunning continued, “I have a feeling a lot [of cases] of the mortgages in retirement are they’ve refinanced for some purpose, to finance a kid’s wedding or to lend money to a kid to pay for a down payment.” A Bank of Montreal survey found that “30% of first-timer home buyers expect parents or family to assist them in buying a home. In Vancouver’s pricey market, 40% expect help.” You could call it a pre-inheritance.
Wealthy Senior Citizens
The Consolidated Credit Counselling Services of Canada Inc. executive director Jeffrey Schwartz, explained: “People are living longer, right [out] of the gate they need more money to live …. The result is seniors are taking mortgages into retirement and, in many cases, it is becoming the new norm.” More lenders, such as ourselves, see senior citizens as mature debtors with the following characteristics:
+ Asset Base
+ Pension Funds
- Fixed Income
Housing Programs for Pensioners
Our Government of Canada has done a fine job creating programs to help pensioners with housing finance. Here are some Canadian programs for pensioners:
- Canada Pension Plan (CPP)
- Québec Pension Plan (QPP)
- Registered Retirement Savings Plan (RRSP)
Canada Pension Plan (CPP)
Basically, all English-speaking Canadians are part of the Canada Pension Plan. Canadian citizens over 18 contribute 4.95% of their income to the CPP; employers match contributions. “You can apply for and receive a full CPP retirement pension at age 65 or receive it as early as age 60 with a reduction, or as late as age 70 with an increase.”
Québec Pension Plan (QPP)
The Québec Pension Plan is a compulsory public insurance plan for workers over 18 years old with a contribution rate of 10.8%.
Home Buyers Plan (HBP)
If you have a Registered Retirement Savings Plan, you can withdraw up to $25,000 tax free to make a down payment for a home under the Home Buyers Plan (HBP). One drawback is that you must make all RRSP repayments before you reach the age of 71.
Control your housing, so you can enjoy your retirement in style. We offer mortgages for pensioners because we know you are reliable, have worked hard and deserve to have your own home. Request your free mortgage quote today and get the help you need to enjoy your Golden Years.