Should cash-strapped retired home owners eye home equity line of credit or reverse mortgages? - GIC Wealth Management

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Should cash-strapped retired home owners eye home equity line of credit or reverse mortgages?

Decoding the mortgage market: You’re a senior citizen and you don’t have enough income to live comfortably. What do you do? It’s an all-too-common question, especially with more than half of Canadians carrying debt into retirement. If you own a home with sufficient equity, and you want to keep living in it, two increasingly popular options are a home equity line of credit (HELOC) and a reverse mortgage. Although both give retirees access to cash, there are significant differences between the two: reverse mortgages are straightforward while HELOCs in retirement are not. If you borrow modestly and with discipline, however, a HELOC can be the best way to bail you out of a retirement cash jam.

The Home Equity Line of Credit (HELOC)
HELOCs are revolving credit lines offered by banks,brokers and other lenders that let seniors borrow against their homes in small or large increments. They typically require only monthly interest payments, no principal. So if you took out $100,000, you’d pay $292 a month in interest, using current rates of 3.50 per cent.

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