Retiring With a Mortgage in Canada: Is It a Problem?

More Canadians are reaching retirement with a mortgage. It isn't automatically a problem — but it changes how you plan.

Renewing on retirement income

At renewal with your current lender, you usually don't need to requalify. Switching lenders does require qualifying on your pension, CPP, OAS and investment income, so lock in options before you stop working if a switch is likely.

Ways to deal with the balance

• Pay it down from RRSP/RRIF withdrawals — but every dollar is taxable income and can trigger OAS clawback.
• Use TFSA savings — withdrawals are tax-free.
• Downsize and use the equity.
• Line of credit — a HELOC is easiest to get while still employed.
• Reverse mortgage — available from age 55, no payments required, but rates are higher and the balance grows.

Model it with the retirement calculator and the mortgage renewal calculator.