Once you stop working, will you still have to make a monthly mortgage payment? Carrying mortgage debt during retirement may be a heavier burden than you’ll want to bear. Anyone considering refinancing or taking on a new mortgage shortly before retirement should certainly think about the following items.

A mortgage payment will significantly increase your monthly living expenses.

Without having to make a mortgage payment, you may be able to comfortably live on much less during retirement. It could also take away from other goals in retirement, like traveling, funding grandkids education, or charitable giving.

You may lose financial flexibility.

Having a large fixed monthly cost is restrictive at any age, but it could be a bigger problem when you’re not receiving a regular paycheck. You may be forced to sell investments at inopportune times (like during a 20% market correction) in order to make mortgage payments.

The mortgage interest income tax deduction will be less over time.

You pay a lot more in interest in year 5 of a loan than you do in year 20.

As a result, with each mortgage payment you make, a larger percentage is applied to principal and a smaller percentage to interest.

Carrying mortgage debt into retirement could limit flexibility and potential retirement goals. Taking steps to be mortgage debt free could provide that increased flexibility to make retirement a more enjoyable experience.

Schedule an appointment with our team if you’re ready to develop a plan to pay off your mortgage before retirement.

Written By  Brett Sebion, Investment Relationship Manager
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