Reverse Mortgage Primer: Life Begins at 55

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For many hard working Canadians over the age of 55, their home represents their largest financial asset. Despite this well earned equity, it’s not uncommon to find people who are unable to live the life they truly want to live, or even struggling to make ends meet. How can they begin to unlock this value after retirement? Or perhaps during a period of inspiration or need? Unfortunately, the home equity of many Canadians will not be realized until after their funerals. Why struggle through retirement only to find your estate awash in cash after you’ve passed away? This is where the reverse mortgage comes in.

Reverse mortgages allow people to continue owning and living in their homes, while benefiting from their value. They’re not for everyone, but reverse mortgages have certainly helped many people enjoy peace of mind, while unlocking their potential to follow their dreams. You’ve worked hard for your home, perhaps it’s time to let your home work for you. 

Why Choose a Reverse Mortgage Over a Regular Mortgage? 

There are many good reasons to choose a reverse mortgage.  

No payments, ever: Your ‘lifetime loan’ will not be due until you sell your home or move. Until then, you may make interest payments if you wish, but you’re under no obligation to make payments of any kind at any time.

No income required: Regular mortgages are fine for those with regular incomes, but reverse mortgages are available to anyone with sufficient equity in their home, regardless of current earnings. 

No credit required: Access to traditional credit is difficult to attain for older Canadians, but this is not so for reverse mortgages. In the case of a reverse mortgage, your home equity IS your credit. 

The mortgage will not be called in the event of one spouse’s passing: Provided that the remaining spouse’s name is on the home title, the mortgage will not come due in the event of their spouse’s passing. 

They’re safe and trustworthy: Canada has comprehensive regulations surrounding reverse mortgages, ensuring that the process is legitimate and reliable. 

You’ll never owe more than the value of your home: In fact, appreciating home values will often offset the accumulation of interest owed. 

You’ll continue to own your home: your name remains on the title and you’ll never be asked to leave. 

They’re tax free: the money you receive will be tax free and will have no implication upon government benefits. 

Why Get a Mortgage at All? 

Money, obviously! The reasons that people choose a reverse mortgage are as unique and varied as the people themselves. Some use the money to take care of debt, improve cash flow, and eliminate stress. Reverse mortgages allow people to live on their own terms, indulge hobbies, travel, and maintain their social lives. People often use the money to improve their home, buy a vacation property, or pay off their existing mortgage. Many need the money for an emergency, or simply want to provide their families with early inheritances while they’re still around to watch them benefit. You can use your money to buy an insane stereo, build a fancy treehouse, or eat artisan ice cream on a daily basis, it’s really not for us to say. 

Reverse Mortgages Do NOT Require You to Leave Your Home

Of course one could always sell their home in order to raise capital, but who wants to do that? Most Canadians would prefer to spend their retirements in their own homes. Our homes, yards, neighbours, and communities are huge factors in our quality of life. 

Provided that you maintain your home and stay current with property tax, your mortgage will not come due until you sell your home or move. You will NOT be asked to leave your home for any other reason. 

Learning More About Reverse Mortgages

In Canada reverse mortgages are available to all homeowners 55 and older whose homes are valued at $150,000 or higher. 

The market offers customized solutions, allowing for lump sum payments or monthly payments, with varying interest rates and penalty structures. 

When making a major decision, such as applying for a reverse mortgage, it’s best to do so with full awareness and understanding of the details. A conversation with your lawyer is a must, and a family discussion is often advisable as well. 

Pinsky offers stress free guidance to those considering mortgages, both reverse and traditional. Contact us for a free consultation and we’ll be glad to discuss pros, cons, features, and next steps. 

Pinsky works hard to ensure that our clients make informed decisions that align with their goals and values. 

Contact us for a free consultation today!