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Mortgages in Canada can be a murky subject – one that we hope to shed some light on with a series of highly informational articles.

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Should you loan money to someone who is house rich and cash poor?

– moneysense.ca

My daughter is 60, divorced, owns a house, perhaps $800,000 house value. She has a small mortgage and no savings of any kind. She lives on a line of credit and a credit card. Her only income is about $300 to $400 monthly CPP.

She is wondering how best to manage. Should she sell now and rent for a short term?

She is worried about investing since CDIC guarantees only up to $100,000.

The next five years will be rough until OAS & GIS kick in. Even then, she will be short of money. I have funds but may need that to cover possible care for myself so I cannot help her now. But if I don’t need that money, she will inherit and should be okay in her later years.

—Sandy

(Letter was edited for length.)

Loaning money to family

I’m sorry to hear you have been stressing about your daughter’s financial situation, Joan. I guess you always worry about your kids, even when they are 60! I do think there are several potential solutions to her problem.

I assume she has already explored increasing her line of credit, otherwise she would not be using her credit cards…

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