Benefits of a Reverse Mortgage
Put it in reverse!
A reverse mortgage is a solution that’s designed for Canadian homeowners above the age of 55. The goal of this mortgage is to help a homeowner turn their equity into cash which is tax-free and without the ongoing requirement of monthly mortgage payments. A reverse mortgage works differently than a traditional mortgage, there’s no need for any upfront principal or interest payments on the mortgage until you or your spouse leaves the home that you are living in.
How does a Reverse Mortgage Work?
A reverse mortgage works more similarly to a secured loan. In order to qualify you have to be above the age of 55, and a homeowner. If your spouse or partner is also on the title of the house, you’ll both need to be listed on the reverse mortgage application and this means that your spouse or partner must also be 55 years or older to qualify. The home for which you are applying for a reverse mortgage also needs to be your primary residence.
After applying for a reverse mortgage and receiving approval, you can access funds from the reverse mortgage that can be used to cover any cost with tax free cash. You can convert up to 55% of the equity that you have in your home into an instant cash loan. For example, if you own your home mortgage free, that’s valued over $450,000, you get access up to $247,500 from a reverse mortgage to pay for anything that you may desire.
Reverse mortgages can be an excellent way to help you maintain ownership of your home while also managing expenses. You could take a reverse mortgage to cover monthly expenses, to pay for education expenses for your children, pay off any debts, to travel or even to cover home renovations.
What are the Conditions for Repayment of a Reverse Mortgage?
Repayment of the loan is only required when you would choose to move or sell your home. With any reverse mortgage product, the amount that you will repay should not exceed the fair market value of your home at the time of your reverse mortgage application. Let’s say your home continues to appreciate in value, the extra appreciation value on the sale of your home stands as a net profit to you. In order to satisfy the conditions of the reverse mortgage you’ll just need to continue paying taxes and insurance while maintaining the property for the eventual sale and transfer.
As it’s likely that the value of your home has grown over the years, the equity that you have in your home value could stand as an excellent portion of your net worth that is going on access. Rather than having to sell your home to access the value that its accumulated, using a reverse mortgage can be a great way to stay in your home without having the obligation of regular mortgage payments again until the time comes you would like to sell.
A reverse mortgage puts you in extra control with access to the funds you may need to handle any incoming financial challenge or opportunity. I say, to enjoy life sometimes you need to put in reverse before you can conquer the road ahead!
Feel free to connect with me to learn more about reverse mortgages or to start your application.
LIve it up,
Sukh Sangha