What is a Reverse Mortgage?
A financial solution for Senior Canadian homeowners over 55.
Unlike a traditional mortgage where you make payments to a bank or someone else a Reverse Mortgage lets you unlock the equity in your home to pay yourself. You can use the money in anyway you want and live comfortably knowing you don’t need to leave your home.
The biggest benefit of a Reverse Mortgage is that you are not required to make regular payments for as long as you or your spouse lives in your home.
Reverse Mortgage Quick-Facts and Features
Tax Free Money
The money you receive does not constitute a part of your taxable income, meaning that your Old Age Security (OAS) and Guaranteed Income Supplement (GIS) is not affected.
Maintain Ownership of Your Home
Contrary to popular belief, you will not lose your home with a Canadian reverse mortgage. You'll never be asked to move or sell to repay your Reverse Mortgage. The requirement is to maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.
Use The Money Anyway You Wish
A reverse mortgage can help you supplement your income or cover unexpected expenses. Pay for medical bills, travel upgrade your home, help family and loved ones, travel and pay monthly expenses without depleting your current savings. The only condition is that any outstanding loans secured by your home must be paid out with the proceeds from your Reverse Mortgage.
Keep All Remaining Home Equity
In many years of experience, 99 out of 100 homeowners have money left over when their CHIP Reverse Mortgage is repaid. And on average, the amount left over is 50% of the value of the home when it is sold.
To qualify you must be a Canadian home owner, 55 years of age or older. The age qualification applies to both you and your spouse. Get up to 55% the value of your home; No credit, no health check and no income needed. Your home must be your primary residence.
No Repayment While Living In your Home
Regular mortgage payments are not required while you or your spouse are living in the home. The full amount only becomes due when you and your spouse no longer live in the home.
Frequently asked questions
Here are some frequently asked questions from past clients.
How does a Reverse Mortgage work?
A reverse mortgage is secured by the equity in your home. Unlike a traditional mortgage in which you make regular payments to someone else, a Reverse Mortgage pays you. The big advantage with a reverse mortgage is that you do not have to make any regular mortgage payments for as long as you or your spouse lives in your home. That’s what has made reverse mortgages such a popular solution in Canada, the U.K., the U.S., Australia, and other countries.
Who is it for?
A reverse mortgage is designed exclusively for homeowners aged 55 and older. This age qualification applies to both you and your spouse.
How much can I get and how is it calculated?
You can receive up to 55% of the value of your home. The specific amount is based on your age and that of your spouse, location, type of home you have, and your home’s current appraised value. Contact us to find out how much you may be approved for.
How do I receive the money?
You can choose how you want to receive the mortgage. A Reverse Mortgage gives you the option of receiving all the money you’re eligible for in one lump sum advance, or you can take some now and more later or you can receive ongoing planned advances over a set period of time to supplement your income.
Will I owe more than the house is worth?
The homeowner keeps all the equity remaining in the home. In our many years of experience, over 99% of homeowners have money left over when their loan is repaid. The equity remaining depends on the amount borrowed, the value of the home and the amount of time that’s passed since the reverse mortgage was taken out.
Will the bank own the home?
No. The homeowner retains title and maintains ownership of the home. It’s required for the homeowner to live in the home, pay taxes on time, have property insurance, and maintain the property in good condition.
What if the homeowner has an existing mortgage?
Many of our clients use a Reverse Mortgage to pay off their existing mortgage and debts.
Should reverse mortgage only be considered as a loan of last resort?
No. Many financial professionals recommend a reverse mortgage to supplement monthly income instead of selling and downsizing or taking out a conventional mortgage or using a line of credit.
What fees are associated with a reverse mortgage?
There are one-time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as our fee for administration, title insurance, and registration. With the exception of the appraisal fee and independent legal advice, these fees are usually paid for with the funding proceeds.
What if the homeowner can’t afford payments?
There are no monthly payments required as long as the homeowner is living in the home.