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Whether you own a Toronto home or not, it is never too early or too late to plan for your future. Sometimes planning for your future means outlining how you will gather the downpayment you need for your first home; if you are passed that stage you might be planning on how to move to a bigger place; and if your kids have already flown the nest, then you might be now in need of mapping out your golden years. Planning for the future is the only way to ensure that you will have the resources you need to succeed at your goals.
 
Before you can sit down and start truly laying the groundwork for your financial future, you do have to be on the same page as your significant other. If you envisioned a condo in the heart of the city as your first home and your partner always wanted a townhouse in a suburb, then you have to figure out a compromise before you can make any kind of realistic financial plan on how to achieve your goals. Likewise, if your ideal retirement involved selling everything off and traveling the country in an RV and your partner never planned on stopping work, then you might run into difficulties down the road. It is important to know exactly what the other plans and wants so that you can build your future together.
 
Regardless of the stage of life at which you find yourself, a good plan starts with a good budget. Only when you sit down and outline what you have, how much you spend and what needs to be achieved will you be able to draw up a realistic game plan on how to get there. Naturally, the hardest hurdle will be saving up for your first Toronto home. After that, moving up the ladder is easier as property values will rise and you will be able to roll that increase in value into your next home. Downsizing when you are older is probably the easiest financial transition you will make, but it will have its own unique set of challenges – including seeing how to let go of memories and mementos built up over a lifetime. If you are unable to draw up a financial plan by yourself, it is advisable to seek the assistance of a certified financial planner. You can find planners through your bank or via independent fund companies.
 
Being financially secure at every age is possible – as long as you have a plan in place and you stick to it. Life is understandably unpredictable and the best laid plans are never fool-proof, but having one will help you weather the unexpected far better than if you have nothing on which to fall back.

Owning a home in Toronto can be a investment given the rapid rise of real estate values over the last decade and a half. However, relying on your home to fund your retirement is not a good idea. Why? Because you will always need a place to live. So, even if you sell your home and make a lot of money – you will still have to buy a smaller home or condo and, given value of the current market, there is no guarantee that you will have any money leftover to fund the kind of retirement you envision.
 
The better option for funding your retirement is saving a little at a time right from when you start working. Even if you are in your mid-forties or fifties and have yet begun setting aside retirement funds, it’s never too late to start. The best way to evaluate how much you will need for your retirement and how much you should start saving can only be assessed by sitting down and thinking about what you want for your retirement and how you plan to fund it. If you are looking for a low-key life without much travel, then you likely won’t need a whole lot set aside. However, if you would like to travel and have the ability to indulge in what you want, when you want it, then it is best to set aside a sum of money for your future years as soon as you can.
 
Unless you plan on selling your home and moving to a smaller, less expensive community or smaller condo when you retire, you should not rely on your home as your many mean of income after your end your career. Even if you think of using a reverse mortgage or HELOC to fund your retirement, you should think carefully about the consequences of such financial instruments before turning to them. In many instances those vehicles are meant to benefit the banks instead of the homeowners.
 
In short, your home should be considered your home. You should not look to it as your retirement security blanket. You will still need money to pay your taxes and utilities, buy your necessities and have some money leftover for travel and entertainment – those are things you can’t do with money from your home.

The Toronto property market has boomed over the last two decades. Anyone living in the area has seen their property value rise dramatically. However, is there still room for growth? Is investing in the Toronto market still a viable option for someone looking for a secure investment? The answers to those questions are a bit complicated.
 
Given the steep rise in Toronto home prices, first time buyers and average homeowners have become priced out of the hot and highly competitive market. Foreign buyers helped increase home values but that just made it harder for ordinary people to buy into the market. With the introduction of legislation curbing foreign property investments, property values have begun to drop and the Toronto real estate market has cooled considerably since the fall of 2017.
 
Given the cool down and drop in prices (in some areas by 22%), now is actually a good time to investment in the market. Yes, it is going through a correction at the moment, but if you are someone looking to buy a home and put down roots, regardless of whether the market corrects some more, in the long run, the property value will increase and if you can get in now with the lower prices, it is a very good thing.
 
However, there is the spectre of further drops in price given the recent political climate the threat of NAFTA falling apart – something that would definitely hurt the industry. So, if you are an investor looking to flip a property, then now might not be the best time, unless you are willing to risk further price drops from the time you purchase to the time you flip.
 
So, there are pros and cons to buying into the Toronto real estate market in 2018 – and they all depend on whether you are an investor or whether you are in it for the long-haul.

If you are a senior with a paid-for home in Toronto, you might be tempted to tap into all of the money accumulated in your home with a reverse mortgage. After all, if you bought in the 1980s you home could well be worth close to or over a million dollars depending on where it is located. Beware though, that however tempting a reverse mortgage might sound, it should be entered into very carefully, with the full awareness that you or your heirs could lose al of the equity in your home and have nothing to show for it in the end.
 
Reverse mortgages allow you to borrow a maximum amount of the equity in your home. Usually it can be up to 60%. The money can be paid out to you in a lump sum or monthly and it is tax-free. However, remember that while you may have this money up front, you will still be incurring monthly interest fees that you don’t have to pay back – but those interest fees can quickly climb to eat away at the remaining equity in your home. Furthermore, most reverse mortgages are valid for as long as you live in your home – meaning that if you are forced to move to an assisted living facility, you or your heirs will have to repay the loan in full. If you don’t have the money, then you will lose your home as well as any money saved up and won’t have any more money to fund the rest of your retirement needs.
 
Although you will never own more than the value of your home when you leave, if you have passed on and your heirs want to keep it, then they will owe the difference between the sale of the home and the value. For instance, if your finale mortgage value is $500,000 but your home only sells for $450,000, if your heirs want to keep the home, then they will owe the bank $50,000. But if they don’t want to keep the home, then they will not owe this money. However, if you must move to an assisted living facility, the sale of the home will cover the mortgage, but then you will be left with nothing to live on.
 
Also, keep in mind that financing a reverse mortgage is expensive up-front, with closing costs coming in at around 10% of the value of the mortgage.
 
Reverse mortgages sound like a good idea, but they should be entered into very cautiously and with your eyes wide open to their pitfalls.

Now that you have your first Toronto property and you have been paying towards it for a year or two – maybe more, you have definitely built-up equity in your place. The equity built adds value to your overall financial bottom line. Lately, with interest rates being as low as they have been for the last decade or more, many homeowners have been tempted to use the equity built up in their homes – is this a good thing or a bad thing? Well, the answer lies in how you use that equity.
 
There are some very good reasons to use the equity built up in your home – and all of those increase your overall net financial value over time.
 
The good:
 
Using equity to finance improvements to your home
Using the equity in your home for renovations and updates is one of the best reasons to pull the money out of your home. Renovations – especially to bathrooms and kitchens can increase your home’s value by up to 25%.
 
Buying more property
If you use the equity in your home to fund additional property purchases, this is another very good thing as it will increase your net value as well as provide you with a steady source of passive income. However, you have to be prepared to deal with all of the ancillary issues that arise with owning income property.
 
Investing
Another good reason to use the equity in your home is to put it into secure investments that will grow at a higher rate than the rate of interest on your home. If you are confident that this is possible and you can achieve such returns, then using the equity to investment might be a good idea. However, if you are going to use it to gamble on iffy investments that have no real security, then you should leave your equity where it is.
 
Education
Borrowing the equity in your home is to further your education is another good investment. If you invest in your education, which in turn will lead to better career and salary prospects, then it is definitely a worthwhile investment – but, you must be determined to complete your education and to apply it for a better career and salary.
 
Debt consolidation
If your debts have spiraled out of control, it might be a good idea to consolidate all of them into your mortgage. However, you need to be extremely disciplined and stick to your budget so that you don’t once again fall into the credit trap – because then, it would have been a bad move on your part.
 
The bad:
 
You should never use the equity in your home to purchase anything that loses value such as cars, electronics, furniture, and vacations.
 
If you are not going to be able to gain anything except temporary pleasure or convenience from your purchases then they should never be made using the equity in your home.

Growing your Toronto property portfolio will take more planning and better nerves of steel than it would in other parts of the country simply because of the very high prices for real estate. If you are interested in building property assets, then it is incumbent that you get your feet wet as soon a possible.
 
Getting the down payment on your first property is the only way to property start on your road to real estate stardom. Once you have that first property, you should pay it down as quickly as possible. Building equity in your property will allow you to then leverage it towards your second property.
 
You don’t have to pay it off fully before using the value of the home to tap your next real estate down payment. Every year your property will increase in value. Add to that increase the fact that you will have paid off part of it and your stake in the property will growing exponentially. When you have enough equity in your existing property you can then borrow against it to fund your next property purchase.
 
As your next purchase will likely be an income property, that next property, if you play your cards right, will be able to finance both your mortgages so that you can save your money for other projects or your third real estate investment.
 
Owning property does come with risks and you must be ready to troubleshoot problems with plumbing, electricity, maintenance, etc… you must also be prepared to deal with difficult tenants. However, if you are able to manage, then your investments will pay off big-time in the end.