How one senior unlocked home equity by downsizing, upsizing and right-sizing
Written by Sheryl Smolkin

Wednesday, October 12th, 2016

With the average price of a Canadian house rising 13% in the past year, it's not surprising that even older Canadians with substantial retirement savings may be looking for ways to unlock some home equity to help fund their retirement.

For a number of seniors, this can be accomplished by selling their home and renting or purchasing a less expensive property, either in the same area or in a smaller, less expensive location.

Selling the family home

Retiree Dave Dineen and his wife downsized, upsized and then right-sized before they came up with the optimum arrangement that would allow them to retire early and travel extensively. Initially, they sold the family home in Waterloo, ON, built a four-season cottage and purchased a one-bedroom condo in the same city.

“This meant our net worth tied up in real estate went from 50% to 35%. We invested the difference and I was able to retire at age 54, even though we are a single income family," he says.

Figuring out what works

The Dineens soon realized the cottage was too much work and the condo alone was too small, so they sold both properties and bought a new, two-bedroom house in Stratford, ON. “The house carried for a bit more than the combined condo and cottage expenses, but I was drawing a bit of money from freelance consulting by then so it wasn't a problem," he says.

After four years, they concluded that their Stratford home was too far from the centre of town and dealing with the after-effects of snow in the winter was no fun, particularly when they were out of the country on extended trips. “Fortunately we were able to sell that house at just the right time and last summer we moved back to Waterloo. We bought a condo that is 100 square feet larger than our Stratford property but cost less. It's also walking distance to everything and we love it," he says.

A home to match your lifestyle

By moving in several stages from an expensive, fully paid home in Waterloo to a less costly condo in the same city, the Dineens freed up cash they could invest to help fund an early retirement.

With the benefit of hindsight, Dineen says he doesn't think they would have done anything differently. He explains, “My wife was an avid gardener and she had to work that out of her system before we were ready for condo living. And after we built our cottage we realized we didn't have the travel bug out of our system yet."

“I think all of these seemingly 'bad' decisions were necessary to help us weave our way to the right destination," he continues. “We're extremely happy with where we are today, but I don't think it would have been the right decision five years ago."

Dineen acknowledges his choices were specific to his own circumstances, but he offers the following suggestions for pre-retirees or retirees contemplating a lifestyle change to free up some equity in their home: “Try to understand how you want to spend your time and then look for the right opportunities. I know lots of people that I think are just slaves to the family home their kids grew up in. That's not where we wanted to be."


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