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A reverse mortgage is an increasingly popular consumer loan for Canadian homeowners age 55+. It allows these homeowners to tap into the home equity they have built up in their homes. There are no monthly mortgage payments but homeowners are still responsible for paying property taxes, insurance, and maintenance. The repayment of the loan is deferred until the homeowner passes away, sells or moves out of the home. Because there are no monthly mortgage payments and homeowners can receive their home equity as tax-free cash, tens of thousands of Canadian homeowners have taken out a reverse mortgage.
How Does a Reverse Mortgage Work?
To qualify for a reverse mortgage, you must own a home, be at least 55 years old and have enough equity built up in your home. The amount of tax-free cash you qualify for is based on your age and the appraised value of your home. The loan is repaid when your home is sold, or the last of the borrowers moves out or dies.
What Are The Pros and Cons of a Reverse Mortgage?
There are several factors to consider before deciding to proceed with a reverse mortgage. As with any large decision, it’s helpful to have an understanding of the pros and cons associated. Some of them include:
What is the Process of Getting a Reverse Mortgage?
The process of getting a reverse mortgage loan is straightforward and typically entails the following steps:
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