fbpx
Saving for future Ontario college tuition is a pragmatic strategy that many well-intentioned parents plan to do in the early stages of their child’s life. And while some families are financially stable enough to steadily set aside money into tuition savings plans, not everyone has the resources to set them up, or to continually fund them over the course of their child’s formative years. With the fluctuating economic climate in Niagara Falls and St. Catharines over the past two decades, many families live in the cycle of ‘paycheck to paycheck’ and best intentions will often collapse under the weight of household budgets in crisis.

BUT…. as a homeowner, you have a secret weapon to defend against the struggle to pay for college tuition by utilizing the equity in your home. Mortgage financing offers two alternatives that allow homeowners with equity in their homes, to take cash out and pay their child’s tuition bill. One option is the cash-out refinance, the other is the Home Equity Line of Credit or ‘HELOC’.

A ‘cash-out refinance’ replaces your existing mortgage with a new larger mortgage, and you (the borrower) take the difference in cash. Depending on the amount of cash you need and the rate of interest, the difference in your monthly payment may be far more manageable than student loan (OSAP) debt.

‘home equity line of credit’ [HELOC] is a second mortgage line of credit that you can draw on as you need it, and typically you only pay interest on the amount you actually use.

Using the equity in your home to finance college tuition costs is a decision that requires lots of information and careful consideration and comparison of the mortgage options available. It may be a great solution in the immediate but needs to fit into your overall financial profile and long-term financial goals.

If you’re considering whether or not this is a suitable option for you, please feel free to schedule an appointment to speak with me, I’d love to help! You can do so by clicking here.

Want more information about our Mortage Planner App?  Get more details here by downloading our PDF.