Thousands of Canadians are using a reverse mortgage as a financial solution to help them bridge the gap in their retirement savings, but these versatile mortgage products can do much more than that.
“There are a number of ways that a reverse mortgage can be useful, beyond retirement,” explains Andre Deleo, President and Principal Broker with Morgix.
What is a Reverse Mortgage?
First, let’s discuss what exactly a reverse mortgage is. These types of mortgages allow homeowners to borrow against the equity in their home. Instead of making monthly payments to the lender, though, the lender makes payments to the borrower.
To qualify for a reverse mortgage, you must fulfill a few criteria. Most importantly, reverse mortgages are only available to individuals who are over 55 years old.
You must also have enough equity in your home to make it worthwhile. If you qualify, a reverse mortgage can allow you to take advantage of up to 55% of the value of your home without having to move.
The interest is added to the loan balance and is paid back to the lender when the house is eventually sold.
Many Uses for a Reverse Mortgage
According to Andre, there are a number of ways that a reverse mortgage can help qualified homeowners meet their financial goals.
“Many clients use reverse mortgage funds for health care expenses, whether for personal support work or to simply pay off debt related to those expenses,” says Andre. “Others may use it for renovating or retrofitting their home. In fact, roughly a third of clients need home renovations/retrofitting due to wear and tear, which can lead to their standard of living being compromised, or simply because of aging and mobility.”
He continues, “Of course, there are a number of homeowners who need to supplement their income. The average annual expenses for Canadians over 65 years old is $60,000 yet their average income is only $40,000.”
There are also some situations where planned retirement savings do not account for emergencies. Whether it is unexpected emergencies, the need to help family members, or health issues, a reverse mortgage can help to ease your financial burden.
Choosing the Right Reverse Mortgage
Just like with other types of mortgage products, there are options when it comes to a reverse mortgage. It is a good idea to consult with a trusted mortgage broker to learn more about the type of financial solution that is right for you.
“A reverse mortgage continues to be a great solution to help clients with their financial needs. Contact me to find out how a reverse mortgage can help you with your unique financial situation,” says Andre.
Morgix is located at 202-18075 Leslie Street in Newmarket.