IS A REVERSE MORTGAGE RIGHT FOR YOU?

John Antle | Mortgages Beyond The Bank

Your Kelowna Mortgage Broker

For many Canadian seniors, residing at home is very important. However, because cash flow typically decreases as you age, affording day-to-day costs can be difficult. If you don’t want to sell your home, a reverse mortgage can be a great solution.

 

How a reverse mortgage works

Canadian seniors of retirement age (55 and up) can access home equity funds by entering into a contract with a reverse mortgage lender like John Antle.

This mortgage product works in the opposite way of a regular mortgage. With a Reverse Mortgage, the lender advances you funding in exchange for a portion of your home equity. Therefore, over time the balance owing on the property will increase instead of decreasing.

Are you retired and considering a Reverse Mortgage?

Contact John Antle to find out more. 

What are the advantages of getting a Reverse Mortgage?

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.

What are some disadvantages of a Reverse Mortgage?

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.

Who can be approved for a Reverse Mortgage?

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

Is there a minimum amount I can receive from a Reverse Mortgage?

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.

How do I receive my Reverse Mortgage funds?

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

What is the interest rate charged on a Reverse Mortgage?

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.

Am I able to secure a Reverse Mortgage with any type of property in Canada?

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.

Do all lenders offer Reverse Mortgages to seniors?

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

How do I qualify for a Reverse Mortgage?

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.

Will the lenders need to confirm my current income to qualify for this type of mortgage?

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

Are there legal and other costs involved to receive funds from a Reverse Mortgage?

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

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