Reverse Mortgage - A Viable Solution for You or a Loved One

January 20, 2023 | Posted by: Sharon Patton

Reverse Mortgage - A Viable Solution

Despite a slowing housing market at the end of the first quarter, Equitable Group reported reverse mortgage growth of over 262%. This unique financial product allows Canadian homeowners 55+ to access the equity in their home and convert it to tax-free cash. Let's look below at what a reverse mortgage is, how to qualify, and the benefits of choosing this as a solution.

What is a Reverse Mortgage?

In Canada, a reverse mortgage is a type of loan that is secured against a homeowner’s principal residence. While it bears some similarities to a regular amortizing balance mortgage, there are a few key differences.

Here are the differences:

No required monthly payments
No maturity date
Applicants must be 55 years of age or older
Applicants must own their house/residence
Additional fees, including a one-time setup fee
Interest accrues on outstanding principal and interest

Ways you can use a Reverse Mortgage:

Relieve financial pressure
Increase cash flow
Buy a vacation property
Home renovations/improvements
Early inheritance
Assist a family member or friend
Healthcare expenses
Alleviate debt
Preserve investments
Travel

How does a Reverse Mortgage benefit you over selling and renting? Let’s look at the numbers.

When it comes to deciding, a reverse mortgage has a lot to do with getting tax-free cash when you need it, with no required payments but having interest accrue over time. Depending on your financial needs, the trade-off of accumulating interest can be an acceptable one; you can enjoy your lifestyle, cover expenses, avoid more costly options like selling off investments, and all the while retaining ownership in the home where you’ve gathered so many memories. You can also manage the accumulating interest with flexible repayment options, and your home could even increase in value over time, which could offset a portion of the interest.

If a Reverse Mortgage sounds like a solution that might be for you or a loved one, let’s chat today.

I look forward to connecting with you soon.

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