reverse mortgages
What is a reverse mortgage?
Every Canadian deserves a financially secure retirement. But did you know, that as a senior homeowner, you can unlock the equity you have in your home without having to sell or move? You can turn the equity you have in your home into cash, so you can finance your retirement easily.
A reverse mortgage (equity release) is a mortgage that is available to homeowners over the age of 55 who have available equity in their home for Lenders to secure against. Most reverse mortgages are payment-free, meaning borrowers never have to make a monthly payment unless they move out of their home or sell.
Borrowers will have to ensure that their property tax, insurance, and other homeowner expenses remain up to date. In short, a reverse mortgage is a home equity loan that has no monthly payment. The advantages of this type of loan are endless for a senior homeowner who is looking for a financially secure retirement.
What should you know?
Think of what your life could be like without a mortgage payment…
You can use a reverse mortgage for:
Debt consolidation
Covering everyday expenses
Cushion in your bank account for emergency use
Home renovations
In-home care
Building investment portfolio
Helping your family
What should you know?
What are the benefits?
Like everything in life, there are pros and cons. Let’s review the pro’s of a reverse mortgage and why this product may be right for you.
Pro’s of Reverse Mortgages
No monthly mortgage payments
The funds are tax-free
No restrictions on how you use your funds
Stay in your home as long as you’d like
Payback is only at time of sale or move-out
The amount due on your mortgage will never exceed the value of your home
Approvals based off of equity in home, therefore easy to qualify for
What should you know?
Is there a catch?
Like everything in life, there are pros and cons. Let’s review the downsides of reverse mortgages, and determine whether this product is right for you.
Con’s of Reverse Mortgages
Higher interest rates than traditional mortgages
Loan amount is determined off of the equity available in your home and is usually capped at 55%
Very minimal equity left over at time of home sale
Credit check will be required and considered to determine amounts, rates and approvals
There are conditions placed on the approval as the Lender sees fit
The repayment can seem high, as it will be an accumulation of the principle and all outstanding interest to be paid at once