Most Canadians are ill-prepared for their retirement. Don't be one of them. Your home is most probably the biggest asset that you own and you might be spending a significant portion of your income servicing the mortgage payments on it. Don't forsake your retirement planning just because you have mortgage payments to make.
Ask us how you can do both at once!
Are you prepared?
If you have purchased your home within the last 5 years, then your purchase price is likely to have been higher than $600,000. Even if it was lower, most of us spend upwards of 30% of our pre-tax household income towards servicing our mortgage (despite interest rates being at near all-time lows). This has several implications:
We are left with little to no savings to build a nest egg for our retirement resulting in having to work late into senior years and/or be satisfied with a lower quality of life
Reduced benefit from downsizing primary home as prices in smaller cities and towns have also increased significantly since onset of COVID-19 pandemic
In the absence of tax deductions on mortgage interest costs, the pre-tax income required to pay down a $600,000 mortgage can be higher than $827,460 for an average Canadian household
All of this means that we are increasingly under-prepared to deal with the costs associated with living longer, loss of employment and other uncertainties of life.
Have you considered?
There is no easy way out of this dire situation but if you have the discipline and the desire to tackle this issue head-on then you could explore the strategy of converting your mortgage into an investment loan. This strategy spans multiple domains like mortgage, investment and taxation and enables one to:
Pay down the mortgage at a much faster pace
Be able to increasingly lower your income tax
Save a greater sum of money each month towards a nest egg
And all without having to contribute more than what you currently do towards your mortgage payments each year. This strategy allows you to do more with each $ you earn and also keep more of what you earn.
How it works?
As with any financial strategy, it is highly imperative to assess the fitment of this strategy with your personal situation and risk tolerance/acceptance before adopting it. Hence, we start this process by means of a discovery call or meeting, wherein we understand your current challenges, your goals, knowledge of financial investments and prepare a projection.
If this turns out to be a good fit for you, then we will proceed with setting you up with the right mortgage solution and then optionally have you work with a financial advisor and tax accountant to address aspects related to investments and compliance with taxation requirements for this strategy to work.
As an expert in the kind of mortgage required for this strategy, Neil has enabled several his clients establish a firm footing to implement this strategy upon. Additionally, he works closely with the pioneer of this financial strategy, Robinson Smith (learn more here) and his team of accountants, investment/financial advisors, etc. to provide a holistic solution to his clients.