What is a Reverse Mortgage?
A Reverse Mortgage is a solution for homeowners age 55+ who have a lot of their life savings tied up in their home and they’d like to use some of it to improve cash flow, help fund their retirement, assist family, etc.
The providers of Reverse Mortgages are governed by OSFI (Office of the Superintendent of Financial Institutions). As they oversee all banks in Canada, consumer protection is always at the forefront.
Understanding How a Reverse Mortgage Works
A Reverse Mortgage is a mortgage that allows the title of the property to stay in the client’s name. However, instead of making a monthly payment, there are NO PAYMENTS REQUIRED as long as you live in the home. You can pay interest if you like, and even pay it down every year, but as long as you live there you will never be required to make a payment.
The interest charged is simply added to your balance and accrues over time. When you sell the home, the mortgage including accrued interest is repaid. The rest of the equity and the house appreciation is paid back to you as the owner. You can always set up a system to pay off your mortgage faster. In the past 30+ years, the increased appreciation has increased more than the accruing interest.
Talk to us about your reverse mortgage options.
Reverse Mortgage Lenders
Lenders who offer Reverse Mortgages tend to be quite conservative in the amount they will lend. The only qualifying factors are your age, the type of property i.e. single-family home, condo apartment, condo townhouse, and the value and location of the property.
In a nutshell …
Pro tip: Recently many older Canadians watched as the Dow Jones and the TSX dropped like a stone and their investment accounts lost up to 30% of their value. Many advisors feel the market will come back but it will take time. Many Canadians rely on these investments to replace their income or subsidize their pensions. Instead of cashing out more of your portfolio, the Reverse Mortgage will provide tax-free cash and work with your existing financial plan.
Money That lets you live
You’ve worked hard for many years, saved your money, and made a great investment in your home. In retirement, you want to live comfortably and do the things you enjoy the most.
To learn more about a Reverse Mortgage in Canada check out our Reverse Mortgage page. Let us help you enjoy your retirement with mortgage solutions that are right for you. Join our mortgage family in the Surrey and Langley area and get in touch for a complimentary mortgage review.