Reverse Mortgages in Canada are on the rise as aging baby boomers start to retire. Covid-19 helped accelerate some seniors to get reverse mortgages sooner, however, this trend has been growing for years. Going forward the next ten years will bring substantial growth as it increases in popularity.
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While you can use your Reverse Mortgage funds any way you want, here are the most common five reasons.
Reverse Mortgage Reason One – Debt
Growing older, we think carefully about the type of lifestyles we want to live as we head into our senior years. Most want no debt and, in many cases, high-interest-rate loans like credit cards and similar have built up and people want them paid off.
Using a Reverse Mortgage to pay off high-interest loans and consolidating debt is an excellent way to use a Reverse Mortgage.
In many cases, once the high-interest debt is paid out, there are no more monthly payments! That is the beauty of a Reverse Mortgage.
Home Equity Bank states 59% of their Reverse Mortgage customers use it to reduce or remove debt.
Reverse Mortgage Reason Two – Health Care Related
As most Canadians know, although our health care system is one of the highest-rated in the world, there are still many expenses not covered. That could be expensive electric walk-out chairs, wheelchairs, wheelchair ramps, vehicles, personal support workers, and much more.
Home Equity Bank states 40% of their Reverse Mortgage customers use it for health care expenses.
Reverse Mortgage Reason Three – Home Renovations
Millions of Canadians have lived in their homes for many years, seen their children grow up and leave for college or getting married and having children themselves. Or in many cases aging parents need more support from family, leading to the need for a living suite.
As those life events evolve us, our homes need to evolve too. That could mean renovations in the yard, where there is less grass to cut and less yard maintenance.
Some renovate to create a legal suite to rent out for extra monthly revenue.
How about a new garage? Perhaps Dad or Mom is really into motorcycles or cars and wants to tinker in their retirement in the newly renovated garage.
How about a brand-new deck? Relaxing in your own backyard can be a wonderful way to enjoy retirement.
Your home may simply be aging and needs a new roof, painting, new gutters, and more. Canadians do not want to compromise their lifestyle in their own households.
Home Equity Bank states 27% of their Reverse Mortgage customers use it for renovations.
Reverse Mortgage Reason Four – Income Supplement
You can choose to have installments of your Reverse Mortgage funds versus one large payment. In these cases, it is based on people that want to supplement their incomes. Whether there is not enough in retirement savings, CPP or pension, reasons vary.
Lifestyle is a common reason for income supplement, especially after retirement.
Home Equity Bank states 25% of their Reverse Mortgage customers use it to supplement their income.
Reverse Mortgage Reason Five – Living Expenses
It seems every time you go to the grocery store, food prices are up. You go get gas and depending on where you live in Canada your gouged based on the day’s trading value. A new car? Increasing by 10K a year it seems, and the maintenance costs are not going down anytime soon.
These types of living expense increases cause huge amounts of stress on our seniors that deserve to live out their remaining years in dignity.
Further to the use of funds, Home Equity Bank also conducted a study with Deloitte about Senior Canadians in debt in May 2014. The study revealed that within the senior demographic (Canadians 55+), 21% (1.4 million seniors) had a financial need and within this group, 13% (845,000) were actively considering options such as reverse mortgages in Canada. There are 4 main categories of seniors who have this financial need.
- “Need to alleviate the stress of debt.”
These customers are very aware of their debt situation and are stressed over the burden of their finances.
- “Need to pay for an unplanned expense.”
These customers had a sudden emergency such as health or house related (leaky roof, flood, etc.) and did not set aside extra money for “just in case”.
- “Want to improve my lifestyle.”
These customers want to incorporate travel, dining out, or even entertainment to improve their lifestyle.
- “Need to maintain my standard of living.”
These customers may have been middle to high-income earners before retirement and are having difficulty sustaining their lifestyle post-retirement.
Although the above 4 categories include the majority of Canadian seniors interested in a reverse mortgage, there are seniors who take out a reverse mortgage for other (less frequent) reasons such as helping family members with an early inheritance, using it as a purchase mortgage, and for investment purposes.
Home Equity Bank states 18% of their Reverse Mortgage customers use it for living expenses.
Take the Next Step – Apply for a Reverse Mortgage Now
Got a question? Just ask. Whatever your reason, it does not matter, Arrowsmith Mortgage is here to help you through every step so you in turn can enjoy the lifestyle you earned!