Articles and Blogs

November 6^th 2020 - Philip Roe

More and more Canadians are reaching retirement age without having the funds that they need. There are, however, options worth exploring. Reverse mortgages, for instance, are one method that is bailing out Canadian retirees when the big day comes. One of the major questions to ask is which financial institutions offers reverse mortgages.

Knowing ahead of time that your options can be pretty limited may direct you to another option. And that is what is most important: options. Do your homework on the institutions that offer reverse mortgages, what they will cost, and what you can expect to get out of that kind of loan.

Which Financial Institutions Offer Reverse Mortgages?

Right now, there are only two financial institutions in Canada that offers reverse mortgages. The first is Equitable bank, which offers reverse mortgages in some of the major urban centers across Canada.

The second is through HomeEquity Bank. They offer a reverse mortgage directly or through approved mortgage brokers. Not only that, HomeEquity offers what is known as the Canadian Home Income Plan (CHIP), which is available throughout Canada.

It is best to shop around and know your options before applying for a reverse mortgage. The reason for shopping around is that your current financial institution might offer a product that best suits your needs.

What are the Alternatives to a Reverse Mortgage?

While reverse mortgages have their benefits, there are situations where going with an alternative may be better. You may find that the costs involved may make an alternative a worthwhile endeavor. The alternatives are:

• Sell your home
• Buy a smaller home
• Move into assisted living or find other housing
• Rent another home or apartment
• Get another type of loan (personal, HELOC, cred card, etc.)

Talking to a financial advisor is another good step. They can help you understand the costs involved in a reverse mortgage, what you might be able to get from an alternative product, and what the best course of action may be for you and your family.

Make sure that you understand how reverse mortgages work and how it can impact the equity in your home over time before worrying about which financial institutions offer reverse mortgages.

Pros and Cons Offered by Reverse Mortgages

Understanding the benefits and downsides is just as important. Financial institutions that offer reverse mortgages will also offer a variety of other products that may be more beneficial. First, let’s get into the pros of reverse mortgages.

Pros

• No regular loan payments required
• No tax paid on the money that you borrow
• Turn the value in your home into cash without the need to sell it
• Money doesn’t impact Guaranteed Income Supplement (GIS) or Old-Age Security (OAS) benefits
• Options on how and when you get the money
• You still own the home

Cons

• Higher interest rates than most other mortgages
• Equity in your home may go down as interest accumulates
• Should you die, your estate will be responsible for paying back the loan
• It may take longer to settle the estate than the timeline for paying back the reverse mortgage
• There might be less money to leave your kids or any other beneficiaries
• Higher costs than other mortgage or credit products

Who Do I Ask About Reverse Mortgages?

The first place that you need to start when inquiring about reverse mortgages is with the team here at Lotus Income. We have years of experience that can get you the answers that you need. The most important thing when it comes to finding a reverse mortgage is knowledge. Being armed with the answers to your questions can mean the difference between a favorable loan and one that you regret.

Reverse mortgages have their own unique set of pros and cons and definitely are not suitable for anyone who qualifies. Discussing with a professional is a great first step and will at least give you a better understanding of this type of loan.

Call our team today or check out our FAQ page to find the answers to your questions. We can get you started down the path to a reverse mortgage today.