Retirement can be an exciting time for Canadians but it can also cause some confusion. Maybe you want to make your last mortgage payment ever, but, you haven’t quite figured out how to go about making that a reality.
Fortunately, this article will help guide you through the process and answer many questions you may have with regards to making your last mortgage payment. Moreover, it’ll also inform you about Mortgage Maestro’s services in this regard and how they can benefit your situation specifically.
What happens if you still have a mortgage when you retire?
If you’re planning to retire and still have a Mortgage and/or a Home Equity Line of Credit (HELOC), perhaps it’s the right time to assess whether you should pay it off or not, but for certain you should know what all your options are at this point.
You need to determine is whether it makes financial sense to pay out the mortgage, for example, where will the funds come from to pay out the final balance? Are you going to have to liquidate, redeem or sell other assets like Stocks, Bonds, Mutual Funds, RRSP’s, or TFSA’s in order to pay out your mortgage? These will all have tax implications and consequences that might not be in your best interest in addition to having those funds no longer be earning a return for you. It will be important to review the options available to you whether that may be refinancing, a line of credit or one of the equity release strategies available to you. The good news is that we can review all of them with you to meet your specific needs for the best possible outcome.
How to make your final mortgage payment
The process of making your final mortgage payment is a bit longer than you might have anticipated. Prior to making your final payment you’re required to ask your lender for a payoff quote. This can be done on the website itself or you can even call them.
The payoff quote will indicate how much principal, interest, fees and any potential penalty you will be required to pay your lender in full to own your home completely. Usually your lender will provide you with a payment date as well.
Also, your payoff statement should mention whether you need to make your final payment via wire transfer, certified check or bank draft and where to make the final payment.
What do you do once you pay off your mortgage?
If you’ve successfully paid off your mortgage in full, congratulations! It is a good time to put a product in place that will allow you access the equity in your home throughout retirement, this is one of the most important things to do.
In the interim you no longer have a mortgage payment, what to do with all those extra savings each month?
Well, there’s a lot you can do with those additional funds. Here’s a few examples.
- Increase your retirement savings – putting extra money away can help top up your retirement income.
- Children’s education – Additional income can be used to fund your children’s or grandchildren’s education. There’s a wide variety Registered Education Savings Plans (RESPs) or insurance backed investment vehicles that are available and we can make an introduction to an Advisor for you.
- Pay off other debts – If you own a credit card or even have a car loan, you can use this opportunity to get rid debt outside of your mortgage.
- Home renovations – Perhaps you’ve always wanted to do a remodel of different parts of your home like your kitchen renovation or patio repair. Well, now you have the funds to do so without the added stress of a monthly mortgage payment.
What documents to expect after making the final payment?
The documents you get may vary based on your lender and the Province you live in. Here’s what you can ask for and expect from your lender and what you can do to ensure that you are clear.
- Make certain you receive a receipt of your final payment from your lender.
- Most mortgage lenders will electronically file the form(s) necessary to remove a paid off mortgage (i.e. Form C release form in BC) – get confirmation from the lender that this has been completed (this can take a few days (BC & Ontario) up to a couple of months (Alberta).
- Go to your local land title office and get a copy of your title report to see that the mortgage charge has been removed.
- You may want to think twice about taking a copy of the deed title from the land title office because if it is lost, the process to replace it through the courts is quite time consuming and cumbersome.
- Your lender should also provide you with a letter stating that your mortgage is paid in full.
Refinance or renew mortgage with Mortgage Maestro
Most Canadian homeowners enter retirement with a mortgage or home equity line of credit balance of some kind. The challenge for most retirees is that these require a monthly payment that was usually set year before and may be too high to make retirement everything it could be.
In some cases, it can be quite challenging to pay off your mortgage in retirement. For example, in a situation where you’re forced to use your savings for a family emergency you’ll be unable to pay off your mortgage.
There are three options available to you if you want to remain in your home for retirement:
- Refinance your mortgage to extend your amortization back out thereby lowering your monthly payments,
- Transfer your mortgage to another lender for a lower rate and potentially extend back out your amortization, or
- Use an equity release mortgage product to limit or eliminate your monthly payment altogether greatly improving your monthly cash flow.
Mortgage Maestro can help with all possible options. We offer custom mortgage solutions for your mortgage renewal or refinancing needs. Our team of professional Mortgage Agents will provide you with the best solution based on your long and short term financial goals.
Key takeaways: How Mortgage Maestro can help!
Whether you decide to pay off your Mortgage before retirement, refinance or eliminate your monthly payments altogether, you’re making the right choice because it will be what meets your needs at the time! With so many lenders to choose from, it can be quite difficult to pick the right program for you. Fortunately, Mortgage Maestro is here to help and will provide advice for you and your interest, as we work for you!
Essentially, we can do all the heavy lifting for you. We’ll do the research and sift through all the programs that banks, credit unions and other lenders have to offer. Then based on your financial goals we can pick a program together that is tailor-made to suit your needs.
At Mortgage Maestro, we aren’t influenced by external banks or lenders. Our decision making process is dictated entirely based upon your financial situation and goals.