reverse mortgage ontario Canada

In-depth information on reverse mortgage

Whether you’re already retired or are approaching retirement, you’ve likely prepared for this stage in your life ahead of time probably because you’ve heard of it from somewhere or you know some on that has done it. But with rising costs of living and longer life expectancy, more and more people find themselves coming up short on funds.

What’s the solution? For some, a reverse mortgage ontario Canada might be just the head start to securing a comfortable retirement for you and your spouse and still have enough to pay some bills here and there.

A reverse mortgage is a loan that allows homeowners over the age of 62 to convert a portion of their home equity into cash. This type of loan is especially appealing to people who want, or need, to supplement their retirement funds.

How does it work?

A reverse mortgage works by using a portion of your home equity to first pay off your existing mortgage on the home – this only works if you still have an outstanding balance on your mortgage..

You are not required to make monthly payments on the reverse mortgage because the loan balance doesn’t come due until the final borrower moves out of the home, passes away, fails to pay taxes or insurance, or neglects to maintain the home or leaves the house, or sells the house even

While you are not required to make monthly payments, doing so could reduce your monthly interest or prevent it from accruing altogether. If you choose not to make a monthly payment on the loan, interest for that month will get added to the total loan balance.

After paying off your existing mortgage, your reverse mortgage lender will pay you any remaining proceeds from your new loan. If you own your home free and clear, you’ll receive all of the proceeds from the loan since you do not have a mortgage balance to pay off first. As the homeowner, you get to choose how you want to receive your funds.

What can a reverse mortgage be use for?

Getting a reverse mortgage can be used for many things depending on who’s acquiring the loan. After all, we all have our different motives and needs. The reason why an individual goes to secure a reverse mortgage is likely not the same as the reason why the next individual secures a reverse mortgage. However, some things the mortgage can be used for include

  • Eliminate or lower monthly mortgage payments 
  • Consolidate every incurred depts. Over the years
  • Pay for in-home care or a nursing home 
  • Make home improvements in the house 
  • Purchase a new home with a home equity conversion mortgage for purchase 
  • Supplement income to allow other assets to grow in value 
  • Create an emergency fund or increase savings for future problems that may arise 
  • Protect home equity from declining home markets 
  • Have access to the net worth tied up in your own home