“I have 4 colleagues whose entire ‘plan’ to address their huge mortgage debt is to take the inheritance they will get when their parents pass (the bulk of which is real estate ‘wealth’) and use it to pay off their own mortgage.”

“I have 4 colleagues whose entire ‘plan’ to address their huge mortgage debt is to take the inheritance they will get when their parents pass (the bulk of which is real estate ‘wealth’) and use it to pay off their own mortgage.
They could have never gotten the house to begin with without ‘assistance’ from those same parents and if the market were to crash before those same parents pass away, then they will be spending the rest of their lives paying off the debt (assuming interest rates never rise).
When you consider our Canadian Bank’s tangible equity ratio, and the massive bloated balance of CMHC, it is clear our nation truly has EVERYTHING wrapped up in real estate.”

Village Whisperer at VREAA 20 Aug 2011 5:31pm

6 responses to ““I have 4 colleagues whose entire ‘plan’ to address their huge mortgage debt is to take the inheritance they will get when their parents pass (the bulk of which is real estate ‘wealth’) and use it to pay off their own mortgage.”

  1. pricedoutfornow

    I know people who have a similar plan. Some are already in trouble, and guess what? The parents are alive and well. I suspect that people may be in for a rude awakening when they realize they don’t inherit enough to pay off the debt, either because their own house has gone down in value, or because health care costs at the end of life with eat up a huge chunk of the expected inheritance. Sad, really.

  2. Waiting impatiently for loved ones to die so you can use their money. Nice.

  3. I had a friend from high school with that exact plan – then her brother died and she kicked her inheritance-to-be plan into high gear. She convinced her mother to sell her house and move in with her and her boyfriend. The mother agreed, put the house on the market for about $1.5M (Kitsilano) and after paying off the reverse mortgages and deferred taxes mom had acquired over the years to help out her offspring, daughter realized less than $150,000. This was not exactly the plan the daughter had envisioned but I wonder if that is what is in store for many a baby boomer.

  4. Yeah, my friend had the same plan until his widowed father remarried a much younger woman who is making sure that she will get the house. His wife’s parents are in care (actually two care facilities) which is costing over $10000 a month for housing an care. These parents are paying for their care through their real estate equity.

  5. Good point: erosion of capital will be a new meme in low interest rate environment. This is set to be a grinding game of musical chairs.

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