Using a Reverse Mortgage for Family Gifts
April 6, 2011 · Print This Article
If you already have a comfortable retirement planned but are looking for a safe, financially-savvy way to give large gifts to your family, consider a Canadian reverse mortgage.
Maybe your children are having a wedding and you want to contribute some of the cost, or they are buying a house. A reverse mortgage on the equity in your home means that you can give your family the gifts you want to give without making any short-term financial sacrifices.
Why not withdraw money for large gifts from my retirement fund?
Withdrawing cash from your income-creating retirement fund in large amounts is never recommended, unless you are using the funds for pre-budgeted items such as travel. Any withdrawals reduce your overall retirement income, and make your future more uncertain. Your family is not going to want their gifts to contribute to your financial uncertainty.
Why not get a loan instead?
Loans will require regular monthly payments, something that most retirees do not have room in the budget for. With a Canadian reverse mortgage, you can choose to make the interest payments annually if you desire, or tack them on to the cost of the reverse mortgage when you sell your home. No monthly payments are necessary.
Why give gifts now?
Life doesn’t wait for anything. It continues on no matter what decisions we make. Generally, your children are more financially stable by the time you would leave them their inheritance, and need more help in their first years of a family. While an inheritance is always nice to get, don’t you want to see the effects of your gift now, like a new house or a wedding, while you are still here? This is one of the more powerful reasons that most of our clients consider a reverse mortgage.
Request a Reverse Mortgage Quote today from Horizon.