5 unexpected uses for Reverse Mortgages

Many Canadians, including yourself, may view Reverse Mortgages as an additional source of income in their golden years. But that's not the whole picture; in fact, using the equity you've built up in your house is a smart method to fund a wide variety of projects and investments. Come with me as I explore some of the best uses for the equity in your home.

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Purchasing a new house

Many retirees consider moving somewhere new at some point so they can downsize, make their home more accessible, or simply enjoy a change of scenery. Not many people know that a reverse mortgage might help finance the purchase of a new house.

With a reverse mortgage, you don't have to worry about making monthly payments, and you can keep more of the money you earn from the sale of your house. With a reverse mortgage, you may maximize your retirement comfort even if you relocate to an area with greater living expenses.
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With a reverse mortgage, you don't have to worry about making monthly payments, and you can keep more of the money you earn from the sale of your house. With a reverse mortgage, you may maximize your retirement comfort even if you relocate to an area with greater living expenses.
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Finances for a divorce settlement

Getting a divorce in Canada can cost upwards of $16,000 if it's contested. One major concern, however, is whether or not one spouse can afford to remain in the marital residence after the divorce is finalized, on top of the legal and other bills that would inevitably arise. Just how does one find the funds to relocate?

Protecting joint assets and future quality of life is at the forefront of everyone's mind during a grey divorce, also known as a divorce involving a couple over the age of 55. Many of the problems that couples face in this position can be easily resolved by taking advantage of the equity in their property. The equity released from a reverse mortgage can be used to settle other joint debts, buy out one spouse's half of the home to simplify ownership and support the relocating spouse's new purchase, or cover the costs of maintaining the home for a single occupancy. Both parties' future financial security will be safeguarded by this action. One spouse may have been financially dependent on the other, but a reverse mortgage, unlike other loan kinds, does not require a lengthy credit history.
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Home mortgage refinancing

Refinancing with a reverse mortgage can be a good option for people whose monthly cash withdrawals are too high, who want to free up capital, or who want to refinance due to changes in their circumstances (such as the property market, interest rates, or their own situation). Although it is crucial to consider all the costs involved in both the closing of your old mortgage and the origination of your new one, if the numbers work out, this can be a great way to rejuvenate your retirement savings. Reverse mortgages, which need no monthly mortgage payments, can provide a major financial relief for homeowners.
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Getting a loan to buy an investment house

Rental properties, which account for 32% of all dwellings in Canada, have long been seen as a sound retirement investment strategy, much like defined benefit pension plans but with greater potential for growth. However, in a competitive real estate market, it can be challenging to come up with the money for a down payment on an investment property without dipping into other assets or resources. The equity you've accumulated in your primary dwelling can be used as a down payment on another property if you take out a Reverse Mortgage. While doing so, your primary residence is protected and you have the means to purchase a significant investment vehicle that has the potential to generate both rental income and capital gains.
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Creating a living inheritance

Sixty-one percent of individuals aged 55 plus plan to leave money to their successors while they are still alive because it is becoming increasingly difficult for younger generations to afford higher education, homeownership, and child care. This method is not only tax-effective, but it also allows you to directly observe the results of your donations. It's a noble goal, but not everyone can afford to create a living bequest without jeopardising their own security. By taking out a Reverse Mortgage, you can tap into the equity in your house, which would otherwise go to your heirs, and use the money when you need it most. As a result, your childdred can  receive immediate financial support from you, while you are able to hang on to your retirement funds and keep the family home in the family.
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When should you think about getting a reverse mortgage?

In Canada, real estate investment has dominated the market for decades. Over $700,000 is the current value of the average Canadian home, which means that many homeowners have a substantial amount of idle equity. It's not surprising that Canadians are increasingly using the equity in their houses to fund retirement and meet other life goals.

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