Plus, a guide on the differences between registered retirement savings plans and tax-free savings accounts, and new thoughts on an old retirement debate
It seems most urgent for parents to help their adult children get into the housing market when real estate prices are soaring.
A parent recently got in touch to ask how best to offer help with a down payment – by tapping the home equity line of credit he and his spouse have on their paid-off home, or by taking out a reverse mortgage. It’s important to note that the interest rates for HELOCs and reverse mortgages have been caught up in the same rise in borrowing costs that has affected mortgages. A HELOC rate might start at 6.7 per cent, while reverse mortgage rates can range between 6.99 and 9.4 per cent right now.
The reader who asked about HELOCs and reverse mortgages is in his 60s. He and his spouse could be in his home for another 20 to 25 years, long enough to build up interest that cuts significantly into the equity left over from the sale price.
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