Carrying credit card or line of credit balances into retirement can strain a fixed income. Consolidating with home equity can lower payments, but it needs extra care.

How lenders view retirement income

Lenders count pension, CPP, OAS, RRIF withdrawals and sometimes investments. Because income is fixed, debt ratios can be tight. Some lenders are more flexible with retirees who have significant equity.

Options

  • A refinance or second mortgage with a regular payment. See which way to consolidate.
  • A home equity line of credit, if you qualify, with caution about interest-only payments
  • A reverse mortgage, for homeowners 55 and older, with no required payments but a growing balance
  • Downsizing, which can clear debt without new borrowing

Protect your future

  • Leave enough equity for possible future needs, such as care or a move
  • Make sure the payment fits comfortably within your fixed income
  • Address what caused the debt
  • Involve family and consider independent financial advice

This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.