If you’re like many Canadians, you’ve spent much of your life working hard and diligently making your mortgage payments. Now you are looking at retiring and need income to do it. There’s a good chance the bulk of your net worth is locked up as equity* in your home. Fortunately, there’s a solution. With a Reserve Mortgage you receive income in your lifetime while retaining full control of your home.
You do not have to make any payments of interest or principal for as long as you or your spouse live there. All you have to do is keep your property in good maintenance, pay your property taxes and property insurance.
It’s a financial solution designed for senior (55+) Canadian homeowners:
- You can access up to 55% of the value of your home
- You always maintain ownership of your home and never have to move or sell
- There are no payments required
- You can receive your tax-free cash over time or one lump sum
* Equity is the difference between the value of your home and the unpaid balance of any current mortgage.
So how do the folks that help you with the Reverse Mortgage get paid back?
The interest on your reverse mortgage accumulates, so the balance owing will increase over time. Historically, we see that the housing market tends to appreciate over time as well, typically offsetting the accruing interest. If you sell your house, or your home is no longer your principal residence, you must repay the loan and any interest that has accumulated; the remaining equity is your’s
Features & Benefits
- F: You don’t have to make any regular payments on the loan.
B: This lets you keep all your income for yourself, easing financial stress or allowing you to do more in retirement
- F: You can turn some of the value of your home into cash, without having to sell it.
B: You don’t have to sell the home you love, and you get to benefit from the hard earned savings you built up in your home.
- F: The money you borrow is a tax-free source of income.
B: This keeps your taxable income low, saves on taxes, and may qualify you for government supplements. It may also allow you to draw down other investments more conservatively, lowering taxes even further.
- F: This income does not affect the Old-Age Security (OAS) or Guaranteed Income Supplement (GIS) benefits you may be receiving.
B: Maximizes your annual income from all available sources, letting you do more of what you want
- F: You maintain ownership of your home.
B: You won’t be asked to move or sell, and you retain all the equity that’s left when you move or sell.
- F: You will never owe more than the fair market value of the home when you sell.
B: That means HomEquity Bank will absorb the loss should you ever sell for fair market value, and not have enough money to pay the balance owing.You can decide how you want to receive the money. You can choose to receive:
- F: A lump-sum payment
B: Put all the money to use to pay off debts, buy property, early inheritance, renovations, travel, etc.
- F: A loan to set up planned advances that provide you with a regular income
B: Take the money more slowly over time, giving you a dependable lift to your cash flow.
- F: A combination of these options
B: Get some extra regular monthly cash flow, with the peace of mind that you can always withdraw a lump sum as well to pay for unexpected costs and life events.
Things to Note:
At your death, your estate will have to repay the loan and interest in full within 180 days. The costs associated with a reverse mortgage include:
- A higher interest rate than for a traditional mortgage or line of credit
- A home appraisal fee
- Lender legal/administration fee
- There are higher prepayment penalties in the very first 3 years depending on the reason for paying out. Penalties always waived upon death and reduced by 50% if moving into care.
- Fees for independent legal advice