My advice is simple: Over 50? Get a secured line of credit while you can qualify.

Contrary to media reports about our ‘record personal debt levels’, it’s extremely prudent to ensure you have access to emergency money.

The line of credit popularity that took place in the ’90s wasn’t a bad thing. It allowed us to borrow at low rates to invest or spend as needed. Many successful investors have been doing this for decades. Borrowing to invest makes smart financial success. Don’t let anyone tell you differently.

We’re seeing more reasons for Canadians to get a secured line of credit now: Age; Income; and Qualification.

If you’re 50 or older and have a mortgage coming due, or maybe you have no mortgage, you should strongly consider getting a secured line of credit instead of just renewing your mortgage.

If you’re retiring, opting for a reduced work schedule or anticipating a reduction in your income for any reason, please act now!

If you don’t think this applies to you, guess again. The new mortgage rules have made it much tougher to qualify. I have seen professionals with great incomes not qualifying or barely qualifying. Why? Because the government has changed how Canadians qualify for mortgages and secured lines of credit. They’ve gone way beyond prudent credit granting… and it’s actually a big problem. BUT, there are solutions.

My advice for people in their 50s is to examine whether a secured line of credit makes sense for you. Ensuring you have access to low-interest money is always a good idea.

Don’t let the media be your financial advisor!

The rule of thumb is that you should have six months of income saved at all times for emergencies, such as job loss, housing repair, car repair, or any type of unexpected repair. At the very least, be sure you have easy and immediate access to six months’ worth of income.

I just had my furnace break down a few months ago. Fortunately, I have a warranty. (I highly recommend warranties for big-ticket items!) This saved me $895. Not that $895 was going to break me, but what if it was $4,500? And what if my car’s transmission went or I had a flood in my house? The list of ‘what ifs’ is endless. Having access to money is always a positive move. Spending it on a new Porsche or some exotic time share definitely isn’t wise, of course!

Here are some details regarding a secured line of credit:

• You don’t pay any interest unless you use it
• Minimum payments are interest only
• Maximum payments are not capped. You can pay it all off and stop interest charges whenever you want
• There are programs available where the bank will cover your legal and appraisal fees (that’s around a $1,200 savings)

Like most loans, it’s easier to get approved for a line of credit when you don’t need the money. Apply while you’re working or earning a good income. You’ll be glad you did!

My advice is simple: Get a secured line of credit while you can qualify. 

Planning ahead is always prudent. If you want to discuss your options, speak with an experienced Mortgage Broker to decide when you should consider getting a secured line of credit.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca