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Better late than never?

The majority of Canadian still dream of owning their own home. However, the high costs of houses and changes to the CMHC guidelines mean more people are waiting and buying later in life.

One mortgage broker shares a story about her oldest first time buyers, a couple in their late seventies. The duo had always wanted to become homeowners, but life kept getting in the way and they continued to rent. It was only at age 78, after watching their granddaughter buy a home, they decided to take the plunge.

But what does it mean to be an older homebuyer? How long can you put off buying before it becomes too late to get a mortgage?

"People come in to buy a home, not to get a mortgage," says David Stafford, managing director of real estate secured lending at Scotiabank.

The good news is it's never too late to get a mortgage. However, older buyers must consider their unique financial situation.

Debt
How much and what kind of debt do you have? What kind of lifestyle do you have? If you have consumer debt, which generally comes with a high interest rate, and then take out a mortgage, you could end up with the majority of your monthly income going towards debt repayment.

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Down payment
Where is the money coming from? Younger buyers tend to save money or have help from family. Older buyers may have money saved or may cash in investments to make the recommended 20 per cent down payment. Would this mean compromising retirement plans in order to pay for a house?

Retirement savings
When using RRSPs as part of the first-time Home Buyers' Plan, people have to pay back the amount borrowed, as well as pay down the mortgage (even when declaring bankruptcy). Before taking $25,000 out of a RRSP, it's important to be able to replace it in good time in order to reap the benefits of investments during retirement years.

Amortization
The average amortization is 18 years, says Stafford, so it's essential when considering a mortgage to be able to pay it off in less than 20 or 25 years.

An expert can help older buyers crunch the numbers and determine whether they are eligible to for a mortgage and can afford ongoing payments, or (ideally) pay it off before retiring.

And, always consider whether buying a house really makes sense, both in terms of lifestyle today and in the future. As for the couple in their seventies, their grandchildren helped with maintenance around the house, and the couple lived happily in their home for many years, before selling when health reasons required other living arrangements.

Renee Sylvestre-Williams is a freelance writer in Toronto.

-- Posted July 14, 2014
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