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More Canadians are carrying their mortgages into old age, and it’s complicating retirement plans

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More Canadians of retirement age are paying off their mortgages, and financial advisers say rising interest rates are making it even harder for Canadians to pay off their homes before retirement.

According to Statistics Canada, the number of people over the age of 65 with an outstanding mortgage on their home will increase from 1.2 million to 1.5 million between 2016 and 2021. But the number of seniors living alone with mortgages also increased from about 181,000 to 220,000 in the same timeframe.

Data from the Mortgage and Housing Corporation of Canada also shows an increase in the percentage of people 65 and older who have a mortgage. People in this age group accounted for his 10% of mortgages in 2017 and his 13% of mortgages in 2022. This age group accounts for 9% of the country’s mortgage balances, compared to 7% in 2017.

moreover, 2022 Survey In a survey of more than 1,500 people conducted by Angus Reid and commissioned by two financial advice firms, 40% of respondents said they were either planning to delay retirement because they were heavily indebted or were already I know it’s been delayed.

Jason Heath, managing director of Objective Financial Partners, a fee-only financial planning firm in Markham, Ontario, said the rising trend of retirees with mortgages was initially driven by years of steep rises in home prices. Accelerated and now rapidly rising interest rates.

“There are whole cohorts of young people who are nearing retirement age or who have a lot of mortgages. Heath said some people get their first mortgage later in life or move into their dream home too late to pay it off.

“Some of these mortgages have interest rates of 1.5% or 2.5%, and when the floating or fixed rates are renewed in the next few years, more interest rates will apply as they will certainly push up the amortization expense. It will be a phenomenon.”

In situations like this, Heath said, he often doesn’t have enough money left to make other investments, and builds his entire retirement plan on home equity and government pensions. People are cornered.

Deb White, president of the BC chapter of the Canadian Association of Mortgage Brokers, said more people than ever have agreed to have a mortgage until retirement, and people are relying on mortgages to borrow. He said that wouldn’t help either.

For example, White said many parents borrow money from the value of their home to put together a down payment for their children.

Many believe it’s the only way younger generations can enter the market, she said, with recent data showing more than 70% of first-time buyers rely on some form of financial support from their parents. He added that he had shown that

In some cases, even homeowners who have already paid off their mortgage can be caught off guard. Responding to a call for The Globe and Mail’s Stress Test podcast, a 40-year-old woman in Toronto said she was living in an exorbitant home after having to buy half the value of her home after her divorce. She said she found herself facing a loan.

The woman and her ex purchased the home for $318,000 in 2008 and paid it off in 2020. When the couple soon broke up, the home’s value rose to her $1.1 million and she was barely eligible to purchase a variable rate mortgage. $550,000 unpaid from her partner.

This woman earns more than $100,000 a year, but she still has to rely on financial help from her parents to pay her bills, as rising interest rates have increased her monthly payments from $1,400 to $2,100. Hmm. She plans to carry her mortgage forward until her retirement. Grove has not identified the woman to protect her privacy.

Heath said people planning to sell their homes and move to cheaper places should also start preparing sooner or later. Such life-changing moves are complicated even in the best of times, but they become even more difficult in old age.

“When you’re 45 and say you’re going to sell your house and move to the country when you retire, it’s one thing to go there and do it,” Heath said. Practical concerns such as access to medical professionals and disposal of personal belongings can complicate the process.

“The older you get, the harder it is to understand these changes.”


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