Stressed about your retirement?
You can get money out of your house without having to sell.
Reverse Mortgage Canada
How to borrow with minimal income, no monthly payments or a co-signer.
Canadian demographics show an ageing population. If you belong to the baby boomers or an earlier generation, you are in a unique situation. Do you have enough to live comfortably? If you are finding it more expensive than anticipated, a reverse mortgage (also known as an equity release or Chip reverse mortgage) may be for you. Our free services can help you:
Reverse Mortgage Benefits
5 ways a reverse mortgage can help you during retirement
Reduce financial stress
A reverse mortgage can be taken out as a lump sum or as monthly supplementary income.
- Pay down other debt
- Pay off your current mortgage
- Pay monthly bills and medical expenses
Taking equity out of your home in the form of a reverse mortgage does not affect your government pension.
- Prop up current pensions
Using some of the equity in your home can help cover the cost of travel expenses.
- Buy a vacation property
- Visit family and friends in other parts of the country
- Road trip from one coast to the other
Give to your family
You can provide financial assistance to children or grandchildren while you are still living.
- Help educate of your grandkids
- Fund a business venture
- Help someone become a homeowner
Improve your home
A reverse mortgage is a great way to take money out of our home to pay for renovations or repairs.
- Make your house more accessible
- Accommodate your changing lifestyle
What is a Reverse Mortgage?
The Government of Canada has provided a comprehensive resource on this subject. In short, reverse mortgages in Canada let you get money out of your house without having to sell. It is a loan, but unlike traditional mortgages, it does not need to be repaid until you sell. There are no monthly interest payments either. You will still have to your property taxes and home insurance. You will also have to keep the house and property well-maintained.
It is possible to get as much as 55% of the appraised value of your home. This money can be taken out as one lump sum or dispersed over time. The borrowing limit keeps you from owing more than the house is worth, even after all the interest has been added. It is designed so you can still have money in your pocket from the sale.
Reverse mortgage Canada pros and cons
Advantages reverse mortgages have over other options
- There are no payments, neither principal nor interest
- You still live in and own your home
- A reverse mortgage is not taxable
- Old-Age Security and Guaranteed Income Supplement are not affected
- You choose when you get the money
Reasons to choose another lending option
- The interest rates are slightly higher than some other loans
- Your estate will need to be settled within the repayment timeline
- A home appraisal is required
- You may incur legal fees if you involve a lawyer
- It may prevent you from securing another loan with your house
Is A Reverse Mortgage Right For Me?
The percentage of people who are using reverse mortgages in Canada is increasing. If you are on a fixed income but have equity in your home, you could be in this group. Perhaps your bills and medical expenses are leaving little for you to live on. You may have to renovate to care for family or for increased accessibility. These are only some of the reasons retirees are choosing to take out a reverse mortgage. I can sit down with you to see if it makes sense in your situation.
Qualifying for a reverse mortgage
A reverse mortgage is not based on your credit record. It is based on your age and your home’s value and location.
Reverse Mortgages are open to anyone who is 55 years or older. If you have a spouse, both must be over 55 to be eligible. On the flip side, there is no maximum age limit! The amount you can borrow increases as you age. This is one time when it pays to be older.
Property Value, Type and Location
The second criterion is that you own a house as your primary residence. The type, location, and esteemed value of your home are all at play. This is because there are different regulations for a condo in Toronto versus a log home in Banff. You will be required to have a home appraisal as part of the qualifying process.
You do not have to be mortgage-free when you apply! A reverse mortgage can take care of this for you. Any money you still owe on your home must come out of the reverse mortgage before you can borrow for other reasons. Say goodbye to monthly mortgage payments.
*Reverse mortgages are not currently offered in the territories.
A reverse mortgage is not just for emergency situations! We can look at them together to see if they are a good fit for you. As a Mortgage Alliance professional, I have the expertise to get the Right Mortgage for you.
– Collin Smith