A reverse mortgage is a way for homeowners 55 or older to turn up to 55% of the value of their home into tax-free cash.
It’s a loan secured against the value of the home, but unlike a traditional home equity line of credit or a conventional mortgage it does not require monthly mortgage payments for as long as you live in your home.
What can you do with a reverse mortgage?
- Pay off debts
- Renovate or make your home more accessible
- Handle unexpected expenses
- Help your children or grandchildren
- Improve your day-to-day standard of living
- Make a special trip or purchase
Reverse mortgages have come a long way. They have evolved from a needs-based product to a solution that many financial planners recommend as an important component of a comprehensive retirement plan.
Unfortunately, there are still many misconceptions regarding reverse mortgages. Below, the myths are separated from the facts.
Myth: The bank owns the home.
Fact: You always maintain title ownership and control of your home, and you have the freedom to decide when and if you’d like to move or sell.
Myth: You will owe more than your home is worth.
Fact: Clients can qualify for up to 55% of the appraised value of the home, 33% on average. As the lender has conservative lending practices, you can be confident that there will be equity left in the home when the loan is repaid. In fact, over 99% of reverse mortgage clients have equity remaining in the home when the loan is repaid.
Myth: A reverse mortgage is a solution of last resort.
Fact: Many financial professionals recommend a reverse mortgage because it’s a great way to provide financial flexibility. Since it is tax-free money, it allows retirement savings to last longer.
Myth: You cannot get a reverse mortgage if you have an existing mortgage.
Fact: Many clients use a reverse mortgage to pay off their existing mortgage and other debts, freeing up cash flow for you to use as you wish. How great would it feel to be free of regular mortgage payments?
It is also important to know these two key points.
You will remain the owner of your home and will never be asked to move or sell your home provided you pay your property taxes and home insurance and keep your property well maintained.
A reverse mortgage will not affect any government benefits you may receive such as OAS, CPP or GIS.
A no obligation assessment is available to determine if a reverse mortgage is a suitable option for you. As a mortgage broker my advice is impartial and I will assist you to review all of the mortgage options available to you.
I am a certified reverse mortgage expert, so I can confidentially review the pros and cons for your individual situation.
It only takes about 90 seconds for the assessment so please give me a call at 1-888-561-2679 or email april.dunn@mtgarc.ca