Clifford and his wife Carmen live in Toronto and have a modest government pension and some savings. Now, because of health problems, they’re starting to run low on cash. To stay in their own home, they will need in-home care. How can they pay those bills?
Clifford and Carmen look at three options:
1. Borrow money on their home.
They may not be able to get a regular loan if they don’t have enough income coming in to make the monthly payments. Since they are both over age 60, they could look into getting a reverse mortgage instead. They would invest some of the cash and use the rest for income.
Reasons for: They would be able to stay in their home a few more years.
Reasons against: Their money may not last. If they run short, they would likely have to sell eventually, and if their health gets worse, it will be harder to move later. They would also have to repay what they borrow, with interest.
2. Sell now and buy a two-bedroom condo.
With this choice, Clifford and Carmen would free up some of the savings they have in their home to invest. At the same time, they can reduce some costs.
Reasons for: In a smaller place, they won’t need to pay as much for cleaning help, and they will have fewer repairs to worry about. They will also save money on hydro and heating. What they save on their monthly costs can be used to pay for in-home care, and they will still own their own home.
Reasons against: They have to leave their family home behind and may have to change neighbourhoods, too.
3. Sell now and move to a cheaper community.
This choice offers the same benefits as buying a smaller home. The big drawback is that they may have to leave behind friends, family, and a city they love.
Clifford and Carmen decide: When they think it through, they agree: It’s time to sell their big home while they are still well enough to make the move fairly easily. Rather than leave Toronto, they will move to a condo. With this choice, they will not have to spend as much of their savings.