- 2011 TD Canada Trust Boomer Buyers Report reveals boomerang kids still at home holding some parents back -
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TORONTO, Oct. 12, 2011 /CNW/ - Nearly four-in-ten (39%) boomers who plan to retire in the next three years still have a mortgage on their home, yet two-thirds of boomers expect to retire mortgage-free (65%). According to the TD Canada Trust Boomer Buyers Report, many boomers plan to move as part of their retirement strategy, with nearly one-third downsizing - but adult children who are living at home are keeping some parents from making a move.
Of those who plan to downsize, 17% of boomer parents are delaying moving in order to accommodate their adult children who are living at home. Twelve percent who will stay in their current home and not downsize, say it's because they may have adult children living with them after they retire.
"If you're approaching retirement and still have a mortgage, it's important to examine your options to make sure you can pay it down," says Farhaneh Haque, Director of Mortgage Advice, TD Canada Trust. "There are repayment strategies that can help you pay down your mortgage faster such as increasing payment amounts or frequency and supplementing regular payments with lump-sum amounts -- and, if you have adult children living at home, consider asking them to help with the mortgage payments. If they are living with you to save money, their contribution to your household finances would probably still be less than they would pay in rent elsewhere."
Boomers' attitudes towards retiring with a mortgage
One-third of boomers who plan to move say the move is part of their retirement strategy. Forty-one percent say they will not require a mortgage to finance their new home, 68% will put down as much of a down payment as possible, 44% will try to save on interest by increasing the frequency of mortgage payments and 34% will try to save on interest with a shorter amortization period.
"It's encouraging that Canadian boomers are taking steps to ensure they will not carry a mortgage into retirement," says Haque. "As part of your overall retirement planning, speak to a mortgage expert, in addition to your financial planner, about ways to balance paying down your mortgage and building your retirement nest egg."
While most boomers feel they'll be able to retire mortgage-free, 35% say it's not likely they will be able to pay down their mortgage because other living expenses make it hard to do so.
There are several simple strategies to help pay off your mortgage sooner so you can enjoy retirement mortgage-free. Haque provides her top three strategies for a mortgage-free retirement:
Strategy 1: Consider increasing your mortgage payments and you can significantly reduce interest costs and have the benefit of paying down your mortgage faster. As a TD Canada Trust mortgage customer, you may increase your payment by up to 100% of the regular payment amount during the term of the mortgage.
Strategy 2: Take advantage of rapid weekly or bi-weekly mortgage payment options. By making smaller, more frequent payments you can reduce the interest costs of owning a home and pay off your mortgage faster.
Strategy 3: Make lump sum payments on your mortgage when you have the extra cash (for example when you receive your tax refund). TD Canada Trust mortgage customers can make lump-sum payments of up to 15% each year of the original principal amount, without paying any prepayment compensation.
About the 2011 TD Canada Trust Boomer Buyers Report
Results for this study were collected through a custom online survey conducted by Environics Research Group. A total of 1,025 completed surveys were collected between June 16-28, 2011 from Baby-Boomers (defined as those born between 1946 - 1964).
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches - most open 8 'til late and many now open Sunday. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.