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A new way of looking at your home equity

Submitted by Peter Boys, Boys Financial

May 19, 2020

One thing that has come to the forefront during the social lock-down during this current COVID-19 pandemic is the need to consider new ways of looking at our home equity.

I have used an innovative banking product from Manulife Bank called Manulife One for almost 15 years that combines your Mortgage, Line of credit and Savings all in one

easy to manage account – hence the name! During this time, we completed two major

home renovations in the $30,000+ range, using our home's 50% equity line of credit to

do this. Both times we paid off the debt very quickly, resulting in us being mortgage

free for several years now. Plus, currently using the built-in line of credit to our benefit

to get paid interest every month, while still having the integrated credit line available to

use should we ever need it for an emergency. Effectively, we're now our bank account


It's time for us Canadians to rethink how we look at our homes, both while working and

in retirement, as our house is usually the most significant asset we own. By creatively

using the embedded equity, we can access tax-free money from our homes when it's

needed. I'm almost seventy-two, so a senior, still working at a job that I enjoy, but I will

retire at some point or work fewer days. Knowing that I can unlock this equity tax-free

at any time, but at this point, I don't see any reason to do so for several years to come.

So, why should seniors consider using their home equity in retirement for tax-free

income? As a financial advisor, I know many seniors are worried they will outlive their

retirement savings. Backed up when a bank survey of Canadians highlighted one-third

of the people polled hoped winning the lottery would fund their retirement. Add these

constraints to the ever-increasing cost of living - all factors now hindering many

senior's; ability to fund a comfortable retirement from their current savings.

Owning one's own home has always been a foundation of the Canadian Dream, with

seniors wanting to live in their own homes for as long as possible. Along with the old-

fashioned thought that it should be mortgage-free in retirement, a great idea, but you

can't eat equity. In the process forcing many seniors to either cut expenses, take on

more debt, go back to work, downsize, etc. Not everyone's idea of an ideal retirement.

Plus, you can't sell off just a piece of your home every time you need money.

The solution is to look at your home equity in a positive light and with professional

financial help look at using a combination of your CPP, OAS and other government

income payments. Along with your RRIF, TFSA, unregistered portfolio and your home

equity to provide a comfortable lifetime income stream


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