A reverse mortgage is a unique loan option available to Canadian homeowners aged 55 and older. It allows you to borrow against the equity you’ve built up in your home without having to make monthly payments. Instead, the loan is repaid when you sell your home, move out permanently, or pass away. This can be a lifeline for those who find their fixed incomes, like pensions, aren’t keeping up with rising living costs, or those who need to cover unexpected expenses like home repairs, without resorting to selling their beloved home.
Who Qualifies?
To qualify for a reverse mortgage in Canada, you must:
- Be 55 years of age or older
- Own your home outright or have a small mortgage balance
- Live in the home as your primary residence
How Much Can You Expect?
The amount of money you can borrow through a reverse mortgage depends on several factors, including your age, the value of your home, and your current mortgage balance. Generally, you can borrow up to 55% of the appraised value of your home, minus any outstanding mortgage balance.
What Are the Terms?
Reverse mortgages in Canada typically have a term of 10 to 15 years. During this time, you are not required to make any monthly payments. However, you are still responsible for paying property taxes, insurance, and any other ongoing homeownership expenses.
How Does a Reverse Mortgage Work?
When you take out a reverse mortgage, you receive a lump sum of money or a line of credit that you can access over time. You can use this money for any purpose – perhaps to supplement your retirement income and maintain your lifestyle, cover healthcare costs, or even help your children or grandchildren with their education expenses.
Is a Reverse Mortgage Right for You?
A reverse mortgage can be a great way for Canadian homeowners to access their home equity without the stress of monthly payments. However, it’s important to understand the risks and responsibilities involved before making a decision. Consider speaking with a mortgage broker to determine if a reverse mortgage is the right choice for your financial situation. If you would like to get connected with a Canadian mortgage broker to find a solution that works for you, go ahead and complete the form below.
