True facts about reverse mortgages

The reverse mortgages of the past are not the reverse mortgages of today.

Did you know that three are multiple lenders providing reverse mortgages?

As mortgage brokers we are here to help guide you and look at all options so you can make an informed decision about whether or not this product is good for you and your family.
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How do Reverse Mortgages work?

Seniors in Canada have access to a reverse mortgage as a tool for financial flexibility throughout retirement. With a Reverse Mortgage, you can get tax-free access to up to 55% of the cash worth of your house. There are numerous purposes for reverse mortgages, including:

• Increasing retirement income and living standards generally
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• Making house improvements
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• Spending money on vacation or other experiences
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• Settling debts
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• Giving loved ones a living inheritance
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• Financing medical and in-home care costs
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• Buying a new house
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There are no regular principal or interest payments necessary with a Reverse Mortgage, which is one of its main advantages. You don't have to pay the balance until after you've stopped living in the house, but interest is applied to the debt. The proceeds are generally tax-free and have no effect on the government retirement benefits you are currently getting.

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Some Myths Relating to
Reverse Mortgages

Reverse Mortgages have the incredible ability to give 55+ Canadian homeowners and their families financial flexibility, but there are still a lot of myths around this product. Here are a few illustrations:

Myth: Your home is no longer yours.

Some people are concerned that obtaining a Reverse Mortgage may result in them losing ownership of their home. The exact opposite, though, is true. With a Reverse Mortgage, you can access up to 55% of your home's worth while keeping 100% of the ownership. No matter how long you live there or what happens to the value of your house, this is true. It's your house.

Myth: You may owe more than the value of your home.
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You and your family will never owe more on a Reverse Mortgage than the house's fair market worth when you leave it thanks to the  Lender Guarantee. The lender takes the loss if the mortgage balance ever exceeds the value of the house. The nicest thing is that you keep your home's value if it increases in value.

Myth: The family home will be lost to your children
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When you leave or pass away, the mortgage does become due and payable, just like a normal mortgage, but the house remains the property of your estate. This implies that your children would always be able to refinance the mortgage or settle it in another manner. In the end, your family is in charge.

Myth: Your heirs won't receive any equity in the house.
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The equity in the residence is still yours! In an economy with rising home prices, both the loan balance and the value of the home increase over time. The majority of the home owners with Reverse Mortgages still have a sizable amount of home equity to give to their heirs as an inheritance.
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The Reverse Mortgage Reality

A Lender Guarantee is included with a Reverse Mortgage. In the event that real estate values decline or the loan total exceeds the value of the residence, the borrower is guaranteed not to owe more than the property's fair market value.‍

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Reverse Mortgages provide reassurance

Due to their "set it and forget it" nature, Reverse Mortgages are popular with many borrowers. You won't have to make a mortgage payment throughout the loan period, and you can stay in your house for as long as you wish as long as you maintain your property obligations, such as paying your property taxes and insurance, and maintaining your home in excellent shape. Other products, like HELOCs, have "loan to value caps," which means that if the loan total goes over a specific threshold, you'll have to sell your house to pay off the remaining sum. With a Reverse Mortgage, that can never happen.

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Home Equity Can Increase Continually

Some homeowners are concerned that the balance of a Reverse Mortgage may eventually deplete the equity in their house. However, home equity can continue to build as home value increase.

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Tax-Friendly

From a tax viewpoint, Reverse Mortgage proceeds are considered favourably. According to the Canada Revenue Agency, Reverse Mortgage payments are treated the same as loan advances from a traditional mortgage, which means they are not subject to capital gains tax.

This is in contrast to selling investments from your retirement portfolio to pay expenses, which is typically accompanied by capital gains tax.

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Reverse Mortgage demand is increasing.

In Canada, demand for Reverse Mortgages is rising as 93% of Canadians would rather retire in their own home that they love and where they have years of wonderful memories.

Second, downsizing to a new home can be both costly with high real estate commissions and moving is always stressful.

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A Gain in Money

You'll see how a Reverse Mortgage can assist any senior Canadian who wants to make the most of their retirement years once you fully understand all of its advantages.

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Boost Your Financial Independence

What are your retirement aspirations? Do you want to go on a trip, make home improvements, or give your children or grandchildren money for a down payment?

You can have this financial flexibility with Reverse Mortgages.

When you start to dispel the myths about Reverse Mortgages and understand how beneficial reverse mortgages can be, it becomes obvious that this is a product worth learning more about.

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