Q. What is a Reverse Mortgage?
A. A reverse mortgage is a special type of loan, used by senior borrowers to convert the equity in their homes into cash. The money from a reverse mortgage can provide senior borrowers with the financial security they need to be able to fully enjoy their retirement years.
Q. What can I do with the money?
A. The money from a reverse mortgage can be used for any purpose; here is a list of possibilities:
- Daily living expenses - managing your budget;
- Home repairs and home modifications;
- New furniture & household appliances
- Medical bills and prescriptions;
- Upgrading your car;
- Pay-off existing debts or credit cards;
- Continuing education;
- Purchase a caravan or ‘R/V’
- Travel, bus tours or visiting family & friends;
- Long-term health care;
- Helping the kids (or Grand-Kids) with a cash gift
- Going on those week-end trips with friends;
- Or joining them for the occasional luncheon.
- The possibilities are almost endless!
Q. Who is eligible?
A. Seniors who own their home outright and are at least 60 years of age. Eligibility also depends on your property’s value. You may also be eligible for a reverse mortgage even if you still owe money on your home. In fact, many borrowers get a reverse mortgage to pay off their existing mortgage. You have the option of accessing the funds in one lump sum. You can only use your own residential home.
Q. How much can I borrow?
A. You can borrow up to 30% of the value of your property, or up to $250,000 depending on your age & the value of the property.
Q. When does the loan have to be repaid?
A. No payments are due on a reverse mortgage while it is outstanding. The loan usually becomes due and payable when you cease to occupy your home as your principal residence. The loan is usually repaid from sale proceeds of the house. If those proceeds are insufficient to repay the loan in full, we will not seek the repayment of the short fall.
Q. What are the risks associated with Reverse Mortgages?
A. The interest rates are usually higher than average home loans. The debt can rise quickly as the interest compounds over the term of the loan – this is the effect of compound interest and is something you need to be aware of before making any decision.