Sylvia*, 60 years old, was lucky enough to be able to buy the shares of her sister and sister-in-law to become the sole owner of the house which belonged to her parents in Alsace. To get there, she dipped into her registered retirement savings plan (RRSP) and used her credit cards. The home, which is worth 225,000 euros, is not rented and she goes there to spend her vacation once a year.
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However, she also has an “old chalet” in the Laurentians. “I don’t have the means to renovate it to be able to rent it and enjoy it occasionally,” she says.
Finally, she lives in an undivided co-ownership for which she has a mortgage of $279,000 in a neighborhood of Montreal where prices have exploded recently.
“I asked my bank to refinance my property to pay off my debts and start fresh, but it was refused,” she says. So I’m wondering now if I’m going to sell it to become a tenant again. »
Sylvia works in the health network and earns $93,500 per year. It has the Retirement Plan for Employees of Government and Public Bodies (RREGOP).
The financial portrait
Table of Contents
Sylvia*60 ans
Annual salary: 93 500 $
Monthly pension from the Quebec Pension Plan (QPP): 886,11 $
FAMILY : $12,000 in guaranteed placement certificate (CPG)
Co-ownership: municipal assessment at $585,200, mortgage loan of $279,000
Chalet to renovate: municipal assessment at $135,000, without mortgage loan
Credit card debt: 32 000 $
Personal loans: 17 000 $
Mortgage line of credit: 4500 $
The advice
If Sylvia is privileged in several respects – her annual income, her retirement fund, three properties – it seems obvious to Marie-Ève Mc Lean, independent financial planner and group savings representative attached to Mérici Services Financiers, that she will have to make choices.
PHOTO SARAH MONGEAU-BIRKETT, LA PRESSE ARCHIVES
Marie-Ève Mc Lean, independent financial planner and group savings representative attached to Mérici Services Financiers
She can’t have everything, or rather, in her case, keep everything.
Marie-Ève Mc Lean, independent financial planner and group savings representative attached to Mérici Services Financiers
But, before analyzing Sylvia’s residences, she looked at her retirement with the scenario where she kept her three properties. With the RREGOP, her QPP pension that she took at age 60, her RRSP invested in GICs with an annual return estimated at 2.4% and considering that she will live until age 96, she would have $48,000 net per year.
“The RREGOP helps him a lot,” remarks Marie-Ève Mc Lean. But, at the moment, with her salary and her QPP pension, she has a net income of $64,000 and she is caught by the throat. She needs to make changes. »
Calculate the weight of your debts
The issue is that Sylvia has a lot of expensive debt: $32,000 on her credit cards, $17,000 in personal loans with interest rates of around 10%, as well as a mortgage line of credit of $4,500.
It is certain that financing the purchase of his parents’ house through his RRSP and his credit cards did not help him. She would have benefited from taking out a loan.
Marie-Eve McLean
The result is that the minimum payment on these debts is at least $1,850 per month, or approximately $22,000 per year.
“She has to find a way to repay them,” says Marie-Ève Mc Lean.
Additionally, she bought her condominium in 2015 by taking out a mortgage of $279,000 and as it appreciated a lot, Sylvia refinanced it, so she has the same amount of debt. She has 15 years left before she’s finished paying it off and she’s paying about $2,100 a month. “It’s similar to what she would pay to rent a home, but if she becomes a tenant again, she will never finish paying,” she explains.
Disposal of a property
The financial planner is therefore of the opinion that yes, Sylvia will have to dispose of a property. But not the one where she lives in order to avoid having to pay rent.
“It is certain that the most effective would be to sell the house in France because she only goes there once a year and she has fixed costs,” she explains. Then, 225,000 euros is about $365,000, an amount on which she would probably have to pay tax, but it is certain that she would be able to repay all her debts with high interest rates and even almost all her mortgage loan. »
Or, she estimates, Sylvia could decide to take part of the sum to renovate her chalet in the Laurentians in order to rent it and enjoy it too.
On the other hand, since Sylvia is very attached to her parents’ house, the other option would be to sell her chalet in the Laurentians which is worth $135,000.
“She will have to pay a little tax, but she will have at least $100,000 left, i.e. $50,000 to repay her costly debts and $50,000 to make a capital rebate on her mortgage loan,” indicates Marie-Ève Mc Lean.
With $1,850 less in expenses each month, she would experience less financial stress. Plus, she would finish paying off her mortgage faster. This decision would help him immensely now and in his retirement.
Marie-Eve McLean
Take action to sweeten your retirement
The financial planner also advises Sylvia to find a way to increase her income in retirement. “She applied for her QPP pension at age 60, which reduces it by 36% for the rest of her life,” she explains. She can change her mind within six months of her request. »
In addition, according to her RREGOP statement, she can buy back 183 days where she did not work to increase her pension. “According to the RREGOP service buyback simulator, it would cost her $13,000 and she could take this amount into her RRSP which, in GIC terms, barely brings her the equivalent of inflation each year,” assesses Marie-Ève Mc Lean. This would allow him to have $960 more per year for the rest of his life and it is indexed. »
If she manages to reverse her decision for the QPP in order to start receiving her pension at age 65 and buys back her days for the RREGOP, the expert calculates that she would be able to have a net annual income at retirement of $51,000.
“It’s important, because despite everything, it’s a good reduction compared to its current $64,000,” she notes. To achieve this, she will have to regain control of her cost of living and that involves repaying her debts. »
* Although the case highlighted in this section is real, the first name used is fictitious.
date: 2026-02-08 12:31:00
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