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Do you need a lifestyle change and extra cash? No worries! A reverse mortgage could be your answer… BY LORNA BLAKER
The reverse mortgage is aptly named because the payment stream is effectively ‘reversed’ instead of making monthly payments to a lender, as with a regular first mortgage or home equity loan. Interest does not have to be met separately, but rather capitalises into the outstanding loan balance i.e. the interest outstanding is compounded. While a reverse mortgage loan is outstanding, you continue to own the home and hold title to it. The money from a reverse mortgage can be used for any worthwhile purpose such as; daily living expenses, home repairs and home modifications, medical bills and prescription drugs, to pay-off existing debts, to assist children in home ownership/deposit, for continuing education, travel, long-term health care or other needs that may arise. To qualify for a reverse mortgage generally you must own your own home and be a minimum of 60 years of age, but this is dependant on the individual lender’s criteria. There are no income or medical requirements to qualify. The size of the reverse mortgage that is available to you depends on your age at the time you apply for the loan, the value of your home, current interest rates and so on. No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when you cease to occupy your home as a principal residence. This can occur if you (or the last remaining spouse) pass away, sell the home, or permanently move into a retirement/hospice facility. The home does not have to be sold to pay off the loan. You (or your heirs) can pay off the reverse mortgage and keep the home. In any event, the amount owed on the reverse mortgage can never exceed the value of the home at the time the loan must be repaid. Moreover, if the home is sold and the sale proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate. You should seek your own independent legal and financial advice regarding your individual situation. This will ensure that you receive the best financial care possible. |
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A reverse mortgage is a special type of loan used to convert the equity in your home into cash. The money from a reverse mortgage can provide seniors with the financial flexibility they need to fully enjoy their retirement years. |