Purchasing a new home is one of the greatest aspirations of many people. Mortgages over the years have helped a lot of homeowners achieve this dream in less time than it would take if they had to save up for the complete home purchase price.
Despite efforts to repay all their home loans before retirement, about 10 million homeowners at least 65 years old are still saddled with mortgage debt. In addition to mortgages, some seniors also carry credit card debt into retirement, compounding their stress levels. In case you are in similar shoes, the good news is that there are easy ways to repay your mortgage and enjoy your retirement age.
Rent out part of the home
Now that there are no children around and you have a lesser need for more rooms in the home, consider renting out a portion of it.
Another strategy is listing the unused part of the home on Airbnb. A report by Airbnb disclosed that over 400,000 senior hosts are on the platform worldwide, and the number is increasing.
The rent payment can be used as extra monthly money for your mortgage principal.
However, it is important to consider the pros and cons of this idea.
- Extra income: Renting out a portion of your home can help generate an additional income that you can use to repay your monthly mortgage or fund the home maintenance.
- Help with maintenance: Depending on the rental agreement, the tenant may agree to clear the driveway they park in when it snows. A tenant is legally obligated to handle minor repairs, such as minor plumbing clogs or damaged bulbs.
- Improved security: Provided the tenants are not security threats, having someone around gives some sense of security. You are certain you can call on them in times of trouble.
- Less privacy: Renting out part of your home means lesser privacy. So, do not do it except you are okay with this.
- Lesser space: The room rented out is a no-go area for you so far; the tenant’s rent is still active. This means you cannot use the room.
- Paperwork: Renting out a room requires some paperwork which can be stressful to get together. For instance, you need to remember to invoice the tenant for rent every month. You will also need to include the income when filing your tax return.
Selling your home and moving to a smaller one can help you offset your mortgage and ensure you leave your retirement life without any worry about loan repayment. Downsizing can make life easier if well-planned. It can offer the opportunity to move close to your family and live a simple lifestyle.
However, before you move, it is recommended that you consider your current and potential health status. Determine whether downsizing to an assisted living facility will be a good choice.
One way to be sure is by doing a trial run. Some assisted living facilities will allow you to stay for a few days to decide if it is what you want.
Most seniors prefer staying in their homes as they age. It is a place with many memories and an environment they are used to and can easily move around.
Fortunately, you do not have to be forced out of your lovely home because of mortgage repayment. You can instead take a reverse mortgage.
A reverse mortgage is a home loan for seniors at least 62 years old. It does not require repayment during the borrower’s lifetime, except when the borrower moves out of the home.
Before deciding on a reverse mortgage, it is essential to ask your reverse mortgage lender, “how does a reverse mortgage work?”. The answer will help you determine if it is a good option for your retirement plan.
Start a business
Your retirement does not place an embargo on using skills to earn income. There are business ideas suitable for seniors. It is essential to consider your health before choosing a business. Do not let the pressure on your mortgage push you into taking a job that could stress you beyond.
Below are some business ideas for seniors:
- Consultancy: Most new companies today are founded by millennials and Gen Zs. These startups need more staff with years of corporate experience, therefore the need for a consultant. Your experience qualifies you as one.
- Academic Tutor: There is no better tutor than someone who understands a subject’s theory and application. There is demand for senior tutors, and the catch is that you can do this virtually. You also get to set your rate.
- Daycare center: The hectic schedule of the corporate world made it tough for young parents to watch over their kids. You can open a daycare to do this at a fee.