If you are thinking about retiring in the near future, but are worried about how you will pay the mortgage, then maybe you should consider selling up, paying the mortgage off and downsizing?
With more and more people stepping on to the property ladder later in life, it has become commonplace to carry mortgages well into retirement. Paying off your mortgage and moving house is a good idea if you feel that you cannot keep up with the monthly payments after you retire and your working wage stops.
Assess your retirement savings
Before you make the transition into retirement, you must assess your savings. If you think you’ve got ample savings to last you through retirement and you can comfortably meet the mortgage payments for your home then it’s probably best that you don’t budge. .
However, if the interest rate on your mortgage overshadows the growth potential of your savings then paying off your home loan quickly by selling your house may be the best idea for you.
Cashing in your pension early
For many people, retirement promises a debt-free life, eliminating monthly payments and bills. If you want to say goodbye to your mortgage for good but don’t have the available funds. you could always cash in your pension early to free up some spare money.
However, this option should not be taken lightly, carefully consider the consequences if you are thinking of taking this step.
Downsize your property
Instead of eradicating your mortgage completely, you could always consider downsizing your property and moving the mortgage on to a different building.
Sell your current property to pay off the existing mortgage, then move to a smaller property where the mortgage payments are much less. You could even apply for a reverse mortgage, available for the over 65s, which converts part of the equity of the home into cash so that the mortgage provider pays money to the borrower.
If you are hoping to use your home equity to cover some of your living expenses, then selling up is probably not the option for you. Keeping your existing mortgage will be cheaper than paying off the rest of your housing debt and taking out a home equity loan.
The process behind making a solid retirement plan may seem daunting, and every aspect should be carefully considered before any drastic decisions are made. What is right for some retirees, may not be the right thing for you to do, but it’s good to know that you do have options.