A reverse mortgage in Canada is basically like any other mortgage except for three key points:
- It’s only available to seniors that are 55 years or older.
- You don’t have to make regular monthly payments.
- Unlike a traditional home loan, the lack of income or credit won’t automatically result in a decline.
The loan amount you’re eligible for will vary depending on such things as your age, your property type and its location, and of course the final appraised value. Typically, properties located in urban centres are eligible for more than those in more rural areas.
A reverse mortgage gives you the flexibility to take only a part of the approved amount upfront; you can take the rest over time either in lump sums or on a regular basis. This way you’re only paying for what you take, and not what you’ve been approved for.
All money that you receive from a reverse mortgage loan in Canada is tax-free, and it has no impact on any other government or pension supplements you may be receiving, such as Canada Pension Plan and/or Old Age Security and/or Superannuation, or private employer pension as well as RRSP’s & RIF’s etc.
The reverse mortgage will allow you to substitute your current monthly repayment for no monthly repayment. That’s right, so long as you and/or your spouse live in the home, you’re not required to make monthly repayments. This is in stark contrast to virtually any other mortgage product which requires you to make monthly repayments. What this means is that you’re finally free to live and enjoy life on your terms.
With a reverse mortgage you’re free to spend the money as you see fit, whether it be to pay off some high interest debt (and putting an end to those nagging payments), do much needed repairs or a renovation, take that vacation you’ve always dreamed of, supplement health care costs, assist family members, or simply boost your monthly income. The choice is yours!
Just like any other home loan, with a reverse mortgage in Canada, your home stays in your name, and you and your spouse are still on title. Ultimately when both you and your spouse move out or sell the home, the debt is repaid; this home loan even gives you the option of ‘transferring’ your reverse mortgage to a new property. Another added bonus of a reverse mortgage is that all the remaining equity, remains yours! In fact, it’s been found that on average, over 50% of the house’s value remains in the form of equity when reverse mortgages are typically repaid, ensuring you’re still able to leave behind a valuable asset to your loved ones. Another advantage of a reverse mortgage is that the lender guarantees that your heirs will never owe more than your home is worth, so no matter what the real estate market does, your loved ones are protected! As you can see, a reverse mortgage is an amazing financial tool, one that allows you to carve out the financial freedom that you had dreamed of for your retirement!