Considering your plan for retirement shouldn’t be left until the last minute. As much as it may daunt you, planning for your work-free days is an important task to complete.
One of the ways you can plan for your senior years is to assess whether it’s more beneficial for you to purchase your retirement home before actually retiring. This decision will depend on what your goals are (if you plan to scale down, move locations, etc.), as well as what your finances look like now.
If you are financially able to purchase your retirement home before your final work day, then many experts suggest that you do. Here’s why:
1. Easier to apply for a home loan when you’re still working
Banks and lenders are more likely to accept your home loan application when they can verify your income. Although you might receive a monthly income from your retirement annuity or pension fund, your working income is often higher and more accessible.
Your debt-to-income ratio is also more favourable when you are employed, compared to when you are retired – making it more possible to secure a 100% mortgage bond for your retirement home.
2. Aware of monthly housing costs to better plan retirement finances
One of the biggest financial reasons for purchasing your retirement home before retiring is that you will be able to lock the bond repayment amount and interest rates at the current figures and not wait for an unforeseeable market in the future.
By securing your monthly payments now, you’ll also know what you will need to pay when the time comes and can therefore plan your retirement finances accordingly.
3. More finance available to deal with unexpected expenses
The longer you own a home, the more you learn about it and are able to spot the areas that require more maintenance. If you purchase your retirement home before retiring, you will have some disposable income to amend any unexpected issues and be prepared if the issue arises again.
4. It could double as a holiday home for now
If you decide to buy a retirement home in a smaller town, near the beach or tucked away in the country, you can use the property as a place to vacation to or even rent it out to holiday goers before deciding to reside there permanently.
Spend your weekends and vacation breaks enjoying your future home with family and friends. Get to know the area, find the best local attractions and amenities, and meet your neighbours.
5. Generate rental income
Whether you bought your retirement home in the city, small town or in a security estate, while you’re not living in the property you have the opportunity to generate a second income and pay off your bond faster.
By the time you’re ready to move into the home, your place could have already been paid off – allowing you to enjoy a carefree retirement without the financial stress.
Start thinking about purchasing your retirement home before you retire today. De Plattekloof Lifestyle Estate has a variety of full-title ownership luxury retirement properties on offer:
Contact our sales consultants to find out more.