Retiring With a Mortgage: Canadas New Reality
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For decades, the measure of a successful retirement was simple: own your home outright and live debt-free. That picture is shifting. More Canadians are entering retirement with mortgages still on the books, and for many, it is becoming an accepted reality.
A Growing Trend
Research from Royal LePage shows how quickly things have changed. Nearly one in three Canadians expecting to retire in the next two years say they will still have mortgage debt. Less than a decade ago, the number was half that. The idea of being mortgage-free by 65 is no longer the standard.
Why It’s Happening
Several forces are driving the trend:
High housing costs. Home prices have surged faster than incomes, leaving many without the ability to fully pay down their mortgages before retirement.
Family support. Parents are helping their children with home purchases, often refinancing or tapping equity for down payments.
Changing retirement plans. Some Canadians are delaying retirement to deal with mortgages, while others are adjusting their budgets to accommodate payments.
Equity withdrawals. HELOCs, refinances, and reverse mortgages are being used to cover expenses, renovations, or family support, leaving balances outstanding later in life.
Is It Always a Problem?
Carrying debt into retirement is not automatically a mistake. For some, it is part of a deliberate financial strategy. The key question is whether the payments fit within a fixed income. If mortgage costs are covered by pensions or investment income and there is a clear repayment plan, it can work.
The risk grows when payments strain essential spending, force RRSP withdrawals, or expose retirees to rate hikes without a backup plan.
Smarter Ways to Manage Debt in Retirement
For those heading into retirement with a mortgage, there are strategies to make it more manageable:
- Downsize with intent. Selling a larger or high-cost home can clear the debt, reduce ongoing expenses, and free up capital.
- Evaluate a reverse mortgage. This option can unlock equity without monthly payments and allow homeowners to remain in place comfortably.
- Restructure before retirement. Refinancing while employed can extend amortization or secure better terms, making payments easier to handle on a fixed income.
- Seek professional guidance. A broker with expertise in retirement income planning can align your mortgage with your broader financial goals.
The Bottom Line
The traditional picture of a debt-free retirement is fading. A growing number of Canadians will carry mortgage debt past age 65. What matters most is how that debt is managed.
If your income can comfortably handle the payments, your assets are diversified, and your plan accounts for rate changes and expenses, a mortgage in retirement does not have to be a dealbreaker. It simply requires foresight and strategy.
