Avoid a mortgage in retirement

By MARY HOLM

Q: I am a prospective immigrant to Auckland. I have a family of five. I know I need a three to four-bedroom house.

I am a retired person of 60 years. I have cash to buy a house.

Please advise: Should I buy the house outright by full down payment, or mortgage it through a bank loan?


A: Your situation may sound different from most people's. But actually it is similar.

Many retired people have mortgage-free homes.

Generally, I wouldn't advise them to get a new mortgage and invest the borrowed money elsewhere.

It wouldn't make sense unless they expected the return on their investment to be higher than the interest on the mortgage.

And to get such a high return, they would have to take on a risky investment.

It might make them wealthier, but it might not. In the meantime, it has complicated their lives.

That wouldn't appeal to most retired people - and I'm guessing it probably wouldn't appeal to you either.

Moving to a new country is unsettling enough. If I were you I would pay for the house with cash. That will give your family a secure base.

And welcome!

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