What is a Reverse Mortgage?

A Reverse Mortgage is a loan secured against the value of the home. It allows homeowners over the age of 55 to qualify for up to 55% of their home value and convert it into cash to pay off debt, renovate their home, gift to their children as an early inheritance, purchase another property, etc. without having to move or sell.

Benefits of Reverse Mortgage:

Easy to Qualify

Income verification and credit score are not required to qualify for a Reverse Mortgage.

Tax-Free Money

The money accessed with the Reverse Mortgage is tax-free.

Maintain Ownership

With a Reverse Mortgage, the homeowner maintains title ownership of the home.

No Payments

No payments are required (principal or interest) for as long as the homeowner lives in the home.

Relieve Financial Stress

Clients can qualify for up to 55% of the equity in the home and calculations are used to ensure equity stays available in the home during the life of the mortgage.

Worried About Your Retirement?

How about receiving a lifetime mortgage deferral.

You can receive income from your home without having to sell.

Qualifying Amount is NOT based on income, credit, or health.
It IS based on your age, your home value, and your home’s location.

two ways you can access money from your home.

The first one helps you take a lump sum of money out of your home.
The second is set up to provide you with a regular payments.

They are both designed to ensure you never owe more than the home is worth, while still being able to access the money you have built up in your home, without selling your home.

1. Lumpsum Reverse Mortgage

The Lumpsum Reverse Mortgage is ideal for homeowners 55+ who are looking for a one-time lump sum to either alleviate financial stress by paying off existing debt, or are looking to finance a major expense such as a second home or a car, are facing costly healthcare needs, or are looking to help a family member out with a down payment or tuition costs for example.

Good to know: The amount you can access from your home increases with age: the higher you are in age, the higher the loan amount you are eligible for, up to a maximum of 55% of the value of the home.

2. Income Reverse Mortgage

An Income Reverse Mortgage is ideal for clients who do not require a large lump sum and are simply looking to supplement their monthly retirement income. The minimum initial advance is $20K, but clients can receive more. Funds are disbursed in minimum $1000 monthly or quarterly planned advances, and amounts can be customized to your needs.

Good to know: Interest accumulates more slowly compared to the Reverse Mortgage, as the loan is dispersed in installments versus all at once (except for the initial $20k minimum).

Benefits:

- There are no regular principal or interest payments required.

- You still LIVE IN and OWN your home.

- A reverse mortgage is not taxable because it is the equity from your home .

- Old-Age Security, CPP, and Guaranteed Income Supplement are not affected.

- You choose when you get the money.

Considerations:

- The interest rates are slightly higher than regular mortgages that require principle and interest payments.

- The loan will need to be repaid when the home is sold or the homeowner(s) pass away.

- It may prevent you from securing another loan on your house.

- You may incur a prepayment charge if you pay out some or all the mortgage, depending on the lender and when you make the prepayment. Prepayments are not required.

- A home appraisal will be required.

- You will be required to have independent legal advice and may incur legal fees from your lawyer.

Keep in mind:

You will still be required to pay your property taxes, home insurance, and condominium fees (if applicable). You will also have to keep the house and property well-maintained.

Some ways in which a Reverse Mortgage can REDUCE FINANCIAL STRESS:

A reverse mortgage can be taken out as a lump sum or as monthly supplementary income
Pay down other debt
Pay off your current mortgage
Pay monthly bills and medical expenses
Maintain investments
Prop up current pensions
Help cover travel costs
Buy a vacation property
Visit family and friends in other parts of the country
Road trip from one coast to the other
Provide financial assistance to children or grandchildren while you are still living
Help cover the cost of education for your grand kids
Fund a business venture
Help someone become a homeowner
Pay for renovations or repairs
Make your house more accessible
Accommodate your changing lifestyle

QUALIFYING

Applicant’s Age

Reverse Mortgages are open to anyone who is 55 years or older. If you have a spouse, both of you must be over 55 to be eligible. On the flip side, there is no maximum age limit! The amount you can borrow increases as you age. This is one time when it pays to be older.

Property Value, Type and Location*

The second criterion is that the property must be your primary residence. The value, type, and location of your home are considered. This is because they want to ensure you always have some equity in your home. A home appraisal will be part of the qualifying process.

You do not have to be mortgage-free when you apply! A reverse mortgage can take care of this for you. Any money you still owe on your home must come out of the reverse mortgage before you can borrow for other reasons. Say goodbye to monthly mortgage payments.

*Reverse mortgages are not currently offered in the territories.

FREQUENTLY ASKED QUESTIONS

Is my information kept confidential?

Everything we talk about is confidential. We only share information with a lender once you fill out a mortgage application and we submit it to a lender for approval.

Will there be multiple credit inquiries?

We pull your credit once and have 30 days to apply to the lender. If we go beyond 30 days, we would be required to pull it again to ensure the information is current. However, we do have a 45-day window from the initial inquiry, to pull it again without affecting your score.

What if I do not get approved?

If we cannot get you approved for a Reverse Mortgage, we can look at other types of financing solutions.

How much does it cost to work with a broker?

For 99% of files, there are no fees to use our services as a broker. Some situations do require us to look at “Alternative Lenders” who charge a fee, but these are rare situations, and we will have this discussion if that becomes the case.

SAFEGUARDS

1.       You always retain title and ownership of your home.
Although your home is used to secure the loan – and the lender is registered charge on the title – you DO NOT transfer home ownership to the bank.

2.       Lending amounts are conservative.
Maximum lending amount is 55% of the value of the home, while factoring in your age, property type and property location. The higher your age, the higher the loan amount you can qualify for. This is done so that the reverse mortgage never exceeds the value of your home.

3.       Homes typically appreciate in value.
The total value of the home is likely to appreciate over time -- especially if it is located in a major city. Meanwhile, only the interest on the borrowed amount accrues. Based on that differential, even a modest home appreciation allows for equity preservation with the Reverse Mortgage in place. This is why over 99% of homeowners have money left over when their loan is repaid.

4.       No Negative equity guarantee.
This means the loan can never be more than the sale price of the home. Many people think that if their home equity depreciates at the time of sale, they/their heirs will end up owing more than the house is worth. However, if we use the lender, HomeEquity Bank, they guarantee that if the home depreciates in value and the mortgage amount due is more than the gross proceeds from the sale of the property, HomeEquity Bank covers the difference between the sale price and the loan amount (as long as the property taxes and mortgage obligations are met**).

**The guarantee EXCLUDES administrative and interest that has accumulated after the due date.

REASONS

“I need to alleviate the stress of debts”
You may be struggling with mortgage payments and credit card bills. You may be putting your children’s needs ahead of your own and helping them with a down payment on a home. You prefer not to access your savings or investment portfolio. You are looking for a solution to ease your financial stresses.

“I need to pay for an unplanned expense”
You may be facing an unexpected home repair such as a leaky roof. You may have to retrofit your house for mobility reasons or hire in home healthcare for day-to-day living. You are facing a short-term financial strain and need funds to bridge the gap and take care of a necessary cost.

“I want to live life to the fullest”
Many Canadians 55+ finally have the time to do the things they want to do, but not the funds to do so. You may want to purchase a summer property or enjoy dining out more. You want to live the retirement lifestyle you’ve always dreamed of.

“I need to maintain my standard of living”
You may find it difficult to adjust your lifestyle after you retire. You are experiencing a shortfall in your retirement funds, and may need to supplement your monthly income or augment your pension income.