As aging in place becomes the new normal, a trend accelerated by the pandemic, more seniors are looking for options to make their dreams a reality. A Canadian reverse mortgage is a loan that helps you, the homeowner, take advantage of your home’s equity to pay for anything you want. Homeowners can access up to 55% of the home’s value for a reverse mortgage, with no monthly payments. Sound to good to be true? Rest assured that reverse mortgages are provided by federally regulated banks that have been servicing Canadians for over 30 years.
Here are a few eligibility requirements to apply:
With home value rapid appreciation, a lot of seniors are house rich and cash poor. Release hard earned equity to live life on your terms. times a reverse mortgage is called an “equity release” as homeowners can get money from their home without selling it. There are many ways to use the proceeds of the mortgage:
- Renovate your home
- Payoff debt
- Help children with a down payment
- Pay for children and grandchildren’s education
- Cover healthcare expenses
- Home improvements and home repairs
- Pay for travel
Homeowners should understand that there are pros and cons to reverse mortgages and speaking to a mortgage broker will help. They can provide you with the details of how a reverse mortgage works and whether it is a suitable option for your family, based on your needs.
Some of the pros and cons:
No monthly payments
Higher interest rate
You still own your home
Costs with mortgage financing may be higher
Mortgage funds are tax free
Equity is reduced as interest accumulates
Money does not affect OAS or GIS
May have less money to leave the estate
Lump sum or scheduled payments
Our mortgage brokers will always ask that you seek independent legal advice, including evidence, before completing the mortgage.
Our brokers and agents will work with you to prepare an application and supporting paperwork. During the initial meeting, we will discuss your current financial situation and future life plans to help decide if a reverse mortgage is an option. We encourage homeowners to use this meeting to ask as many questions as they need. Usually, our mortgage broker will then work on appraising your home to ascertain its value to determine the amount of the reverse mortgage you can qualify for. Your application will then be evaluated against factors including age of homeowner(s), location of home, type of property and the home’s condition.
During the application process, we will also ask how you would like the funds to be received and the mortgage term you are interested in. Our mortgage brokers will always ask that you seek independent legal advice, including evidence, before completing the mortgage. Before receiving the reverse mortgage loan, borrowers may be asked to pay off and close any outstanding loans or lines of credit, including home equity lines of credit (HELOC) and mortgages. Homeowners can apply for a Canadian reverse mortgage by contacting a Square Capital Mortgage Broker or Agent.
Checkout Square Capital Website for more information: Reverse Mortgage
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