Dear David,

My husband and I downsized several years ago. We carry a small mortgage with payments that  fit comfortably within our fixed income. We thought we’d be moving to a retirement community around this time, but love our home and want to stay here for a couple more years. The house needs some updates, including the furnace, air conditioner, and roof. If one or more of these fails unexpectedly, we don’t have the savings available to cover the replacement, and could be forced to move sooner than we planned. What options should we consider to prepare for potential expenses while staying in our home on a fixed income? – PROTECTING OUR FUTURE

DEAR PROTECTING: Before any major components fail, it may be worth completing a roof inspection and HVAC check. A qualified professional can often estimate the life left in these systems and provide you with an approximate timeline for replacement, so you can plan for the expense instead of worrying about the unknown.

Because you have equity in your property, a secured home equity line of credit can provide a financial safety net for unexpected repairs. You don’t need to use it unless something breaks, and interest is only charged if you draw on the funds. The fact that you have a small mortgage on your home should make it easier to qualify. 

Consider this: if you accessed $30,000 at 6% interest on an interest-only basis, the monthly cost would be roughly $150 per month. For many retirees, a secured home equity line of credit can provide peace of mind if something unexpected happens, and is a practical way to create a financial buffer if you don’t have a lot of extra savings. 

While you are thinking ahead, it’s worth checking to see if there are government programs available for energy-efficient furnaces or air conditioners. Depending on your utility provider, there may be rebates, grants, or financing programs to help with replacement costs. Be sure to read the fine print so you fully understand the terms, and do not sign a lease-to-own or rental contract for your furnace or AC.

Because you are contemplating moving to a retirement community in the future, it helps to keep your exit plan in mind. Major updates boost your home’s resale value, and some components are more critical than others. Air conditioning may be considered optional, but a leaking roof or a furnace that fails on a cold January weekend creates an urgent and expensive problem.

PRO TIP: Set up that home equity line of credit. Once it’s in place, you’ll have a financial safety net that allows you to enjoy living in your home, instead of worrying about whether something needs to be replaced. Keep in mind that from a resale perspective, homes with newer components are very attractive to buyers. You’ll get the bragging rights of a major upgrade when it comes time to sell, and in the meantime, you can enjoy greater peace of mind while you stay in the home you love. #Advice #AskDavid #TheNegotiator 

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.