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How Does a Canadian Reverse Mortgage Work
Canadian Reverse Mortgage Facts
- You and your spouse (if you are married) must both be at least 55 years old or older.
- The amount of loan that you get varies depending on your age, the house value and the location of your home. The minimum loan is $20,000. The maximum loan is $750,000.
- Eligibile amounts are determined through an independent appraisal of the property. Costs associated in obtaining a Canadian Reverse Mortgage may be paid from mortgage proceeds at time funding. This means you would not be required to pay for the closing costs of the reverse mortgage out-of-pocket.
- You can get pre-approved for the maximum amount initially, and only have a small amount advanced. If you require more funds at a later date, simply call to receive those funds.You only pay interest on the amount that is loaned to you ... not the amount that you get approved for.
- All money that you receive for a Canadian Reverse Mortgage is tax-free.
- Canadian reverse mortgages do NOT affect any Old Age Security or Guaranteed Income Supplement government benefits you may already be receiving.
- You make absolutely NO monthly repayments while you or your spouse live in your home. Other mortgage products require you to make a monthly payment. With a Canadian Reverse Mortgage you do not have to make any mortgage payments.
- You still get to keep the house in your name; you are still on title (just like you would with any other mortgage). When you sell the home the debt is paid through the proceeds of the sale...however you even have the option to ‘transfer’ your reverse mortgage to a new property.
- You keep all the equity that is left in your home. 99% of all homeowners have equity in their home when the reverse mortgage loan is repaid. In fact, on average over 50% of the house value is still equity by the time that the Canadian Reverse Mortgage is repaid. In the event of the passing of the borrower, when the reverse mortgage must be repaid the heirs of the estate can obtain a standard mortgage on the property to pay out the reverse mortgage at that time.
- Your estate is well protected. The lender guarantees that you or your heirs will never owe more that the home value.
- Save on Taxes! You can use a Canadian Reverse Mortgage to take cash out of the home and put it into investments. All the interest charged on the loan is then tax deductible.