If you’ve been reading about the mortgage industry in Canada lately, you’ve probably come across the term “reverse mortgage.” How much do you really know about this type of mortgage, however? At its core, a reverse mortgage is a mortgage loan that is secured based on the total equity you have in your home. A reverse mortgage differs from a traditional mortgage in several ways, but the most notable difference is that you are not required to make any payments on the loan as long as you or your spouse live in the house.
Generally, when you take out a reverse mortgage on your house you can borrow up to 40 percent of the value of your home. The particulars of the amount you can borrow depend, however, on certain criteria such as your age, the location of your home and its appraised value.
Just as with a traditional mortgage, there are some eligibility requirements you will have to meet in order to be able to qualify for a reverse mortgage. First, you and your spouse must both be at least 60 years old. Second, you must reside in Canada and own your home. If you own a home outside of Canada or live in Canada in a home you do not own, you will not qualify for a reverse mortgage. Finally, you need to have some equity in your home against which you can borrow. The amount you still owe on your mortgage must not be more than 40 percent of the total value of your home.
To find out about the many benefits of reverse mortgages, talk to a mortgage broker Edmonton residents. To start, however, one of the benefits is that you can use the equity you have built up in your home to create an income stream. You can make choices about how much money (up to the allowable maximum) you want to take out and how you would like to receive it. For example, you can opt to take out your loan in one lump sum or in regular payments. It’s important to understand that when you take out a reverse mortgage you still maintain ownership of your house. You still have the right to sell the house and move whenever you wish.
Money you receive through a Canadian reverse mortgage program can be used for whatever you want to do with it. It’s your money. You can pay off other loans or debts, renovate your home (which can increase its value should you want to sell it in the future) or you can simply use the funds to create a retirement income stream for you and your spouse.
Canadian reverse mortgages are designed to use a portion of the equity in your home, allowing you to get extra money in your pocket without having to actually sell your home. Reverse mortgages are not offered by every lender, so if this is something you can considering it’s important to talk to a qualified mortgage broker. If you meet the eligibility requirements, a broker can help you find a lender that will offer you a reverse mortgage.