The Reverse Mortgage is the fasted growing mortgage product in Canada over the past 4 years.
A reverse Mortgage is geared towards borrowers aged 55 years or older who need to access money or cash flow by using the Equity in their homes but cannot qualify for a traditional mortgage based on income etc. Under a Reverse Mortgage no mortgage payments are required over the life of the mortgage. A borrower can choose to take out the funds as a lump sum or monthly distributions. The mortgage does not have to paid back until the borrower sells the home or leaves the home. A misconception is that a Reverse Mortgage will eat away at all the equity in the property. The interest on the loan will increase over time (you can choose to pay the interest on the loan each month) but so will the equity as property values increase. The equity in the home today should be the same or greater in 10 or 20 years with a Reverse mortgage in place.
A lot of older Canadians do not live the lifestyle they want or cannot give to there kids or grandkids. Why not access those funds now and live the lifestyle you want or give to those who you love when they need it.
Sometimes a borrower may have investments that he or she does not want to touch or cannot access at a certain time. A Reverse mortgage can step in to cover the funds needed rather than breaking up the investment portfolio. Some costs that a Reverse mortgage can help with are
- Pay for home improvements or repairs on a property,
- Cover your regular expenses,
- Top up monthly income,
- Pay for travel,
- Pay for healthcare expenses,
- Pay-off existing debts,
- Help your children or Grand Children with an early inheritance
In this current low rate environment, a Reverse Mortgage can make a lot of sense.