A reverse mortgage is loan that enables home owners to convert part of the equity in their home into cash.
Besides falling, the number one fear of many seniors is not having enough money to pay their day-to-day living expenses as they grow older. Have you thought about it yet - maybe not for yourself, but what about for your parents?
Fact: the majority of the 9-million-strong "baby boomers" have the bulk of their net worth in their house. Their investment stocks, RRSPs and TFSAs making up the last 1/10th of their balance sheet. Only 30% of boomers have some sort of pension plan, and CPP/OAS (if you are eligible) is going to pay only about $1200/mo.
A reverse mortgage is a product that allows a home owner 55+ to access 10-50% of the equity in their home as either lump sum or over time with no requirement to make monthly payments nor to qualify based on income, credit, or health.
While one can argue with the prudence of tapping into home equity, to the retired or retiring homeowner who is low on options and cash flow, the access to money this option provides is compelling. Here's a link to a Globe and Mail article with some real examples.
For those that want to remain in their current homes and maintain their existing standard of living, obtaining a reverse mortgage might now be the only realistic option. Statistically, 60% of the borrowers in these programs will be elderly women who live alone with a median age of 76 years.
We'll get to the good below. Let's take a look at the "fine print" for a moment.
As licensed professional mortgage brokers, we know exactly what it takes to qualify you for a mortgage and we do more than just get you a great mortgage at a great rate, we will show you the way, too.
The market for reverse mortgages is growing, the Canadian Government (OSFI) is watching, and safeguards exist. There are multiple providers now and rate competition. From a mortgage and financial planner's point of view, a reverse mortgage may be a solution to help a client or their parents meet their financial objectives as tapping into home equity creates options and flexibility.
If you think a reverse mortgage is right for you, let's get started with a complimentary assessment.