Is A Reverse Mortgage Right For You in Kelowna?

There are advantages to consider when receiving this type of mortgage financing:

1. There are no required regular payments on the loan – you can choose to pay zero per month.
2. You can receive cash from the value of your home without the need for a sale. 
3. It’s easy to qualify, as reverse mortgages do not require health or income information.
4. Receiving money from reverse mortgages does not reduce your eligibility for Old-Age Security or Guaranteed Income Supplement benefits.
5. This home equity reverse mortgage represents tax-free cash! 
6. If your property increases in value, you still receive the benefit should you decide to sell.

Disadvantages to consider are:

1. A reverse mortgage interest rate can be troublesome in some cases. Reverse mortgage Interest rates are often higher than residential rates.
2. As you borrow more funds based on your reverse mortgage rate, interest also accumulates more quickly. This can rapidly reduce your equity position, even when based on a fair market value for your home. 
3. While there are not necessarily any automatic monthly mortgage payments to take care of, there are initial costs associated with receiving a reverse mortgage.
4. If you were to pass away, your estate is responsible for payment in full of the funds received, including the accrued interest based on the reverse mortgage rates that were agreed to. This could result in a reduction in the value of the estate.
5. Although you are reducing the amount of your home equity, you retain ownership therefore are responsible for maintenance, taxes and insurance costs.

In order to be eligible for a Reverse Mortgage you must be a Canadian homeowner and be age 55 or older.

Unlike a home equity line of credit, where you decide how much you want and the repayment schedule, the minimum advance for a Reverse Mortgage is $25,000.

The funds are provided to you either as a one-time lump sum or can be paid over a predetermined amount of time.

The interest rate charged is higher than a regular residential mortgage. Ask your mortgage broker for an update on current reverse mortgage interest rates available.

For this type of mortgage financing, the property must be your primary residence. Normally this means you have lived in the home for at least six months.

There are two lenders in Canada that provide Reverse Mortgages: HomeEquity Bank and Equitable Bank.

Lenders will generally consider the following when approving a Reverse Mortgage:

1. Your age (and age of your spouse if they are also registered on the title of the home).
2. Appraised value of the property and location.
3. The equity position you have currently. 55% of the value of your home may be provided to you from a Reverse Mortgage.

Lenders will consider property value and equity position to qualify you for this mortgage. Your income is not an important consideration.

Yes, initial costs include, application fee, appraisal fee and lawyer charges.