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November 5^th 2020 - Philip Roe

Retirement is something that is on our minds more and more as we age. We all think about the day where working is no longer a requirement but achieving that goal isn’t as easy as it seems. For this reason, more and more Canadian seniors are turning to reverse mortgages.

Even if it seems like there is enough money for retirement, there are so many things to consider. Medical payments, insurance, prescriptions, and any day-to-day living costs can really start to add up. Canadian seniors are turning to reverse mortgages to help address those post-retirement issues.

Seniors are turning to reverse mortgages because it can help Canadian seniors aged 55 and older find sounder footing in retirement.

What Exactly is a Reverse Mortgage?

Before we can truly understand the reasons why seniors are turning to reverse mortgages, it helps to know what they are. The most basic explanation is that reverse mortgages let you borrow against the equity already in a home. Even better, it doesn’t require selling the home, allowing seniors to retain ownership of the home. This is also known as an “equity release.”

Reverse mortgages require that the homeowner, and anyone listed on the title, be at least 55 years old. The lender will also look at the appraised value of your home and the area that you live in.

Why are Canadian Seniors Turning to Reverse Mortgages?

Where to start? There are a number of benefits to opting into a reverse mortgage. The good thing about this type of loan is that there are almost no conditions on how the money can be spent. Even better, there are no regular payments required of a reverse mortgage. Unlike home equity lines of credit (HELOC) and traditional mortgages, you don’t have to make any payments until the loan comes due.

Reverse Mortgages and Wise Spending Reasons

Having access to payment-free loans, particularly the kind that allows for uninhibited spending, can be used in smart ways. More and more seniors are taking out reverse mortgages for the right reasons.

Paying Down Debt. Even for seniors that have paid off their home prior to taking out a reverse mortgage, they will likely still have debt. High-interest credit cards, in particular, can make it difficult to ever fully get out of debt. Seniors are turning to reverse mortgages to help pay those balances down and to get totally out of debt for the first time ever.

Pay Off Medical Bills. Medical bills are a real problem, particularly later in life. Even if you have been fortunate enough to be totally healthy for most of life, a recent illness can wipe savings out and leave a pile of bills in its wake. Seniors are turning to reverse mortgages to pay those bills off, get out from underneath the debt, and feel better about their financial situation.

Make Home Renovations. Home maintenance is one of the essentials for homeownership. Perhaps things like a roof replacement, an HVAC upgrade, or a deck have been getting put off. Thankfully, the funds from the reverse can be used to make any essential or optional upgrades a reality. Canadian seniors are turning to reverse mortgages to upgrade their home substantially. Remodeling the kitchen, upgrading the master bath, or finishing the basement are just a few of the things that a reverse mortgage can pay for.

Advantages for Seniors

Perhaps the biggest positive for taking out a reverse mortgage is that it doesn’t require selling your home. Keeping the deed to the property while being able to get the money needed for various endeavors can be huge.

The only instance where ownership would be rescinded would be in the event that the property is sold or that you move out (the home has to be the primary residence to qualify for a reverse mortgage). Stay current on maintenance, taxes, and insurance,  and the reverse mortgage will stay current and valid.

Seniors applying for a reverse mortgage can get the cash in a couple of ways: a lump sum or recurring payments. Even better, the funds are completely tax-free. Whether using it to make serious upgrades to the home, to pay off bills, or to go on a dream vacation, a reverse mortgage can be a great option for seniors.

Who Do I Ask About the Pros and Cons of 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.