What Is A Reverse Mortgage?
A reverse mortgage in Canada is a lending option available to Canadians over the age of 55. Unlike traditional mortgages that require monthly payments to pay down principal and interest, a reverse mortgage allows homeowners to borrow up to 55% of the market value of their home without having to make principal or interest payments. The amount owing on the loan grows with time as interest accrues on the borrowed amount. Reverse mortgages are considered equity-based lending programs and are not based on income or credit history, making them an attractive option for those with limited income but significant home equity.
Reverse mortgages can provide retirees and some individuals with a way to improve their financial situation. Over the past decade, the cost of living has increased, but home prices have increased even more rapidly. A reverse mortgage allows you to tap into the equity in your home while continuing to live in it, thereby maintaining your current lifestyle. By using this tool, you can access funds to pay for expenses such as home repairs, medical bills, or even travel. However, it’s important to weigh the potential benefits against the costs and fees associated with a reverse mortgage, and to ensure that it aligns with your long-term financial goals.
Will I Keep Ownership Of My Home?
Absolutely! When you take out a reverse mortgage, you continue to own your home. If you decide to sell your home or if you’re able to pay off the amount owing, your reverse mortgage can be paid out. However, if you haven’t sold your home, you’re not obligated to pay off the reverse mortgage. This means you can continue to live in your home for as long as you wish, and the loan will only become due once you permanently move out or pass away.
What Are The Advantages Of A Reverse Mortgage?
It allows individuals to own their own homes further into their retirement. But it also allows individuals to:
Common Myths Regarding Reverse Mortgages
In the past reverse mortgages have been seen as a disadvantage to the homeowner. These common misconceptions are simply not true in this current economy.
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