Do you have questions about where you are going to live when you retire?
While there are some people who look forward to the idea of moving somewhere with warmer weather or more family, there are more still who dream only of staying in the home they raised their children and spent so much of their life in.
The great news is, that if you fall into the latter category, you don’t have to face retirement with fear! There is an awesome financing tool that allows you to remain in your beloved family home when you retire and it is called a reverse mortgage.
With a Canadian reverse mortgage, eligible homeowners can take advantage not only of the money they have already put into their home but the monetary increase in their home’s value since they purchased it. By making use of up to 50 percent of the current market value of their home, Canadian homeowners can look forward to continuing to make memories in the home they love, even after they retire.
Reverse Mortgages – What are they?
A Canadian reverse mortgage is a home financing product that allows Canadian homeowners over the age of 55 to access the equity they have built up in their home over the years. This equity is paid back to the homeowner via a series of monthly payments that can be used to pay for upgrades to their home or family vacations or to supplement retirement income to help with living expenses. The amount of the reverse mortgage loan each homeowner receives can vary based on things like the current value of their home, their age, and the age of their home.
Monthly reverse mortgage payments will continue to be made to the homeowner as long as they are living in the home, which means they will not be responsible for repaying any of these payments until they decide to move or they pass away.
Reverse Mortgages – The Requirements
The requirements to qualify for a reverse mortgage are relatively simple. The borrower must be at least 55 years old and must not hold another mortgage on the property. The second requirement is that the property that the reverse mortgage is taken out on must be the homeowner’s primary residence.
Reverse Mortgages – The Benefits
Assuming you meet the above requirements, additional tax-free income and stress-free retirement planning are just two of the many benefits you and your spouse can take advantage of with a reverse mortgage.
A few other things to keep in mind are that reverse mortgages do not require a specific credit score or that you or your spouse must move out when the other passes away. A reverse mortgage also gives you the flexibility to decide how you want to receive your money.
Reverse Mortgages – What Happens When I Pass Away?
One of the most common questions we have heard when it comes to reverse mortgages is in regards to what happens when the homeowner passes away.
There are a few different options that will be available to your family following your passing. If your family wishes to retain ownership of your home, they will have the opportunity to pay off your mortgage loan for no more than the fair market price. If your family does not wish to retain ownership of your home, they may choose to sell your home and pay off the loan or have the financial institution sell your home, take out payment for the loan and deliver the difference to your family.
Reverse Mortgages – Other Considerations
Similarly to other mortgage products, reverse mortgages do involve origination and closing costs, although these costs can be covered by the mortgage payment made to the homeowner. Just keep these costs, as well as property taxes and insurance fees, in mind when you are planning how much money you will have access to use once you obtain your reverse mortgage.