Later Life Mortgages for Retirement: Protect Your Family’s Future
The world is changing. We are living longer and retiring later, and many people need to work until a much older age than ever before. But what happens when you retire? The answer to that question might be an “later life mortgage.”
A later life mortgages is a loan that you take out when you retire, typically from your company. You’ll get monthly payments like with any other type of mortgage or home equity line of credit (HELOC) and the interest rate might be tied to something called an “index.” Indexes are set by Wall Street banks and they can change over time depending on things like inflation rates. When it comes time for you to pay off the last bit of this debt, you either sell your house to cover it or hand the keys back to your lender.
This kind of financing is different than most mortgages because there’s no limit as long as it reflects the market value at all times during retirement years–you’re never required to sell your house, unlike with a traditional mortgage.
This can be an excellent option for people who have been saving money their whole lives but aren’t ready to retire yet–they could borrow against what they’ve saved and don’t need anymore while still living in the same home.
And it’s important to know that this kind of financing is not just one-size-fits all, so you should talk to your employer or retirement center about which would work best for them.
One small drawback to this kind of financing is that you might have to pay taxes on the loan–but if your interest rate isn’t too high, it shouldn’t be a big deal.