Reverse Mortgage

What’s a Reverse mortgage?

A conventional mortgage is where you borrow a certain amount and gradually pay it back. A reverse mortgage is where a lender advances you a lump sum or provides the money in stages and you make no monthly payments. As a result, the accrued interest is added to the loan balance and the mortgage grows steadily.

It is important for us to review your financial situation to determine the best solution for you and weigh it against Home Equity Line or traditional Bank Loan options. Two important factors to be considered are:

  1. You can get a Reverse Mortgage regardless of your income or credit rating
  2. No monthly payments are required (however, you can make payments and get discount on interest rate)

 

A reverse mortgage is available if you and your spouse (if you are married) are both at least 55 years old, giving access to the equity in your home without having to sell the home up to 50% of the value of home. The amount of loan varies depending upon your age, the house value and location of your house. The minimum loan is $20,000 and the maximum loan is $750,000. Many retired home owners have lots of equity in their homes but are struggling to make ends meet and do not want to sell their homes. You can use the money to pay for anything you want – home repairs, Credit Card debts, bills, travel and so on…, and you don’t have to pay back the loan or interest until you sell your home or pass away.

Some of the pros and cons of a reverse mortgage are:

Pros:

  • No income, credit rating qualification required
  • No regular, monthly payments are required
  • You don’t have to pay back the loan or interest until you sell the home or pass away
  • You keep the ownership of the home and all the equity left on your home
  • You can pre-approved for the maximum amount initially and take the disbursements as and when required
  • The borrowed money is tax-free and does not affect your Old-Age Security and Guaranteed Income Supplement Government Benefits
  • Interest charged on the loan is tax deductible

Cons:

  • Interest rates are much higher than typical mortgage rates and secured line of credit rates
  • Interest starts to accumulate faster as loan amount increases
  • Only one lender provides the Reverse Mortgages
  • The only way to get out of a reverse mortgage is to sell your house or pass away
  • If you pass away, the borrowed amount plus interest accrued may not leave anything for your children or other heirs (according to Canadian Home Income Plan-CHIP, most of its clients still have more than 50% equity in their home when they sell).

Whatever your reason is to consider a reverse mortgage, as mentioned above, please feel free to Contact Us to discuss a solution best suited to your current situation and circumstances.

Serving the Greater Toronto Area in Canada

The GTA, including Toronto, Etobicoke, Mississauga, Streetsville, Oakville, Burlington, Milton, Hamilton, Ancaster, Georgetown, Brampton, Markham, Vaughn, Cambridge, Waterloo, Kitchener, Stoney Creek, Grimsby, Welland, St Catharines and Niagara Falls.

Mortgage originated as a FSCO licensed agent #M16001628

Mortgage Brokerage – Mortgage Allies license #12358

Head Office: 2345 Wyecroft Rd, Unit 1, Oakville, ON, L6L 6L8