Considering the fact that most new houses take at least fifteen years to be paid off, it is a common trend for people to start financing their dream home in their thirties or some time at the peak of their career. But that does not mean that people with only a few years left before retirement don’t have the capacity to finance a house of their own. You don’t even have to compromise your retirement fund just to make sure that you will be able to pay for your monthly dues.
Many people choose to finance a home in their fifties for a variety of reasons. Many of them build new ones in preparation for their retirement while some are looking to earn steady income from renting their properties. There are also those who prefer to downsize from spacious houses which they may not be able to manage in their senior years to smaller and simpler bungalows that are perfect for the elderly living independently. Others are just starting to finance their own homes ever since they have started earning their own money.
Whatever your reason may be, financing a new home even in your fifties is definitely possible if you do it with careful planning. Here are four important tips to financing a home in your fifties that you should know.
Use equity from an existing home.
Taking on a huge debt just a few years before you retire is not a good decision at all as it may lead to bigger financial problems later on in life. If your home is currently not under a mortgage or you have not taken an equity loan out of it yet, you may opt to use the equity fund from your property. You may enjoy lower interest compared to getting a home loan. Just make sure that your new home has the same or lower value than your existing one. Check out Responsible Equity Release and get professional advice on the equity of your properties.
Buy a new home at least five years before you retire.
As much as possible, don’t wait until the last year of your retirement before you finance a new home. Five years will be good enough to pay off a huge chunk of the home’s value before you use your retirement fund or any savings that you have. By this time, most people may already be earning maximum salary, making it easier to pay a huge amount of their new home’s value. If prepayment is allowed, this can make your monthly payment lighter and easier in the future.
Get a house that you can afford.
This is true not only in getting a new home but also in any type of spending. Only buy what you can afford so it will not become a burden in your expenses later on. A new home should not eat up your monthly salary nor your retirement fund.
Manage your retirement budget.
Even if you are still active in your working career, you shall already set a monthly budget out of your retirement fund. Set an amount for the monthly payments for your home. You may need to adjust your other spending if needed. And also don’t forget to save some amount in case of emergency.
