Is a Reverse Mortgage a Good Idea – Disadvantages?
Many homeowners are unaware of what a reverse mortgage is and often assume it may be detrimental to its real purpose, helping seniors enjoy their retirement!
This false sense of negativity is often based on how reverse mortgage loans differ in Canada versus the United States from decades past.
Many assume the Bank buys your house, gives you a lump sum payment, and now your homeless! This is not factual in any way in Canada.
This attitude is changing rapidly for seniors as many have challenges in retirement with limited financial resources, yet their home is paid for or has substantial equity.
Reverse Mortgage Advantages
- You do not have to make any regular loan payments.
- You may turn some of the value of your home into cash, without having to sell it.
- You do not pay tax on the money you borrow.
- This money does not affect the Old-Age Security (OAS) or Guaranteed Income Supplement (GIS) benefits you may be receiving.
- You still own your home.
- You may have options as to when and how you receive the money
- You can pay off debts and/or consolidate debt.
- You can renovate or repair your home increasing value.
- You have emergency money for unexpected expenses like medical or emergencies.
- You can improve or maintain your standard of living.
- You can pay for a vacation or a special purchase.
- Financially aid your children/grandchildren.
- No Health Record Checks Required.
- You Will Never Owe More Than the Value of Your Home.
- Reverse mortgages are designed to help Canadians, like you, stay in their home for life.
- 93% of Canadians want to age at home.
- Enjoy Retirement!
Reverse Mortgage Disadvantages
- Interest rates are higher than most other types of mortgages.
- The equity you hold in your home may go down as you accumulate interest on your loan.
- Your estate must repay the loan and interest within a set period of time when you die.
- The time needed to settle an estate may be longer than the time allowed to repay a reverse mortgage.
- There may be less money in your estate to leave to your children or other beneficiaries.
- Costs associated with a reverse mortgage may be higher than a regular mortgage or other credit products.
One Choice – Canada’s Only Bank for Reverse Mortgages
Beginning in 1986 the Canadian Home Income Plan (CHIP) began offering reverse mortgages. You can get a reverse mortgage directly through reverse mortgage brokers at the same rates as direct. This approach keeps local brokers with local cash local as it should be! We can help any homeowners in all British Columbia!
Click here for a free Reverse Mortgage Consultation, there is no obligation.
References
https://www.canada.ca/en/financial-consumer-agency/services/mortgages/reverse-mortgages.html