If you’re not familiar with a reverse mortgage, it is a loan that you take out on the security of the value of your home. These mortgages are made for homeowners who are 55 years or age or older and allows them to turn as much as 55 percent of their home’s value into cash — tax free. The funds that you receive from a reverse mortgage can be used for anything: monthly expenses, renovations, that long-awaited Alaskan cruise, college expenses, settling other debts. The borrower maintains ownership of the home and does not have to make any monthly payments. The note only becomes due if the homeowner decides to sell the house or move out to a different primary residence. The lender guarantees that the amount due upon moving or sale would not exceed the fair market value of the dwelling at the time of that transaction. In many cases, the home appreciates in value, and none of that increase goes to the lender — it remains with the homeowner.
Reverse mortgages in BC are only available to homeowners who are Canadian and who are at least 55 years old. In the case of a married couple, both of you have to be at least 55. The lender will analyze several factors in the lending decision: your age(s), your home’s location, the appraised value, the condition of the home, the existing amount of equity, and the type of home (condominium, detached, and so on).
Why is this so popular among seniors in Canada? Most of what you own, if you are like most people who own a home and are at least 55 years old, consists of the money you have saved up over time and the equity you have built in your home. Most Canadians have seen their homes appreciate in value over time, and so the value of that equity is a considerable proportion of their overall net worth. While having a home with a considerable value looks nice on your personal balance sheet, it doesn’t help you in terms of liquidity unless you sell the house. Reverse mortgages in BC are a way to take advantage of some of that equity without having to move out of the house.
Some people start out on a reverse mortgage and then later decide to move into assisted living or to another part of the country. At that point, you could sell the house and use the proceeds to satisfy the reverse mortgage, or you could keep the house and use other funds from your savings to pay back the principal and interest due at that point in time.
Does this sound like the sort of cash infusion that you could use? Contact us today to see if you qualify for a reverse mortgage.