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Most people have heard of a reverse mortgage, but many don’t know how it works. A reverse mortgage enables you to receive money from the equity in your home without having to sell. The financing allows you to borrow up to 55% of your property's current value.
The maximum amount borrowed is determined by:
A borrower can apply for a reverse mortgage if:
A lender will consider the following criteria when reviewing your reverse mortgage application:
You must pay out any existing mortgages or lines of credit secured against your home – like a HELOC – if you are to take out a reverse mortgage. The proceeds from the reverse mortgage can be used to close out these items at the time of the reverse mortgage funding.
With the remainder of the funds, you can:
You can receive the money for a reverse mortgage in one of 2 ways:
Unlike a traditional mortgage, you do not need to make regular monthly payments on a reverse mortgage.
When you need to repay the loan
You need to repay the amount if:
When a default applies
A default on a reverse mortgage applies if:
Repayment after the last borrower passes away
When the last borrower passes away, their estate must repay the total amount owed on the reverse mortgage, typically after 180 days. This gives the borrower’s family or trustees enough time to determine how they want to repay the loan – either by selling the home and paying back out of proceeds, refinancing with another mortgage, or paying it off with other assets.
The expenses related to reverse mortgage financing may include:
Check out the costs, as they can vary by lender. Some fees may be included in the balance of the loan amount while other expenses may be paid upfront.
Several financial institutions offer reverse mortgages in Canada, including Bloom Finance Company. To get answers to any questions you may have about reverse mortgage and whether it is a good fit for your situation, please call us at 1-866-882-5666 or complete a short online application.
When taking out a reverse mortgage, you should consider the advantages and considerations.
Advantages
Drawbacks
You should ask the following questions of your reverse mortgage lender:
A reverse mortgage is a powerful solution to provide 55+ Canadians with financial flexibility in retirement. Make sure you fully understand the product before you take out a reverse mortgage, and ask all the questions you need of your reverse mortgage lender.
Access up to 55% of the value of your home as tax-free cash and live retirement on your own terms.
Apply NowNo monthly payments required
Never owe more than your home’s worth
Keep 100% ownership