Mortgage Blog

Who can Benefit from a Reverse Mortgage?

February 3, 2020 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

Who Can Benefit from a Reverse Mortgage?

A reverse mortgage is a unique borrowing solution designed for Canadian homeowners 55 years of age and older who would like to remain in their home while also being able to access some of its equity without making regular payments.

All other lending products that enable homeowners to tap into their home equity – such as a home equity line of credit (HELOC) or mortgage refinance – require regular payments. Borrowers must also qualify based on their income and credit score.

With a Red Deer reverse mortgage, you can access up to 55% of the value of your home and your credit is rarely a factor. And, most important, you retain control over your home. You’ll never be forced to sell and you’re only required to pay back the loan when you decide to sell or leave your home.

You can benefit from a reverse mortgage to remain in your Red Deer home if:
- You and your spouse are both at least 55 years old and hold title to your home
- The reverse mortgage is for your primary residence (not to be used for a vacation home, cottage, rental property, etc)
- You have sufficient equity built up in your home
- Your property is located in an area where a reverse mortgage provider lends

Another bonus is that when you receive funds through a reverse mortgage, you can use them however you choose. As well, they’re tax-free, which means your current pension or other income will not be impacted.

The top five ways people typically put their freed-up equity to use include:
1.Improving cash flow to supplement retirement income and savings
2.Paying off debt
3.Updating or renovating to make the home more accessible
4.Helping children or grandchildren
5.Taking a dream vacation

Because there are no payments required while you remain in your home, reverse mortgage interest rates are higher than conventional mortgages. The exact rate depends on several factors, including: your age; the loan amount; and your property’s location. Reverse mortgage interest rates have, however, remained around 5-6% in recent years for fixed rates. A variable option is also available.

You’ve worked hard all your life, so you shouldn’t have to settle for a cash-strapped lifestyle or having to sell your home in your retirement years.

Wondering if a reverse mortgage may be the right solution for you or your loved ones? Answers are just a call or email away! Brandi Pierik, Red Deer Mortgage Broker, Dominion Lending Centres

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