Is your roof leaking? Do you have a bucket list of trips you’d like to take? For many homeowners over age 55, a reverse mortgage is the solution to securing money when problems or opportunities pop up later in life.
As baby boomers age in BC, reverse mortgages are becoming more and more common. Why? Because you can get the cash you need and keep your house.
How do reverse mortgages work?
You can secure up to 50 per cent of your home’s current value and you don’t have to make any regular payments. With a reverse mortgage arranged through an Okanagan mortgage broker, you pay back the loan and the interest when you sell your house or move.
What are the disadvantages of a reverse mortgage?
- Higher interest rates than some other types of mortgages.
- Several fees may need to be paid, including a home appraisal fee, legal fees, and a repayment penalty for moving or selling your house within three years of getting your reverse mortgage.
- The equity you have in your house decreases as the interest on your reverse mortgage accumulates.
- Your estate might have to repay the loan and interest quickly, sometimes before your estate can be settled, if you die before you sell or move and repay the mortgage. Taking out a reverse mortgage also means your family members and heirs might have a smaller inheritance.
Despite some of these factors, in BC, where home values are high and homeowners want to turn that equity into cash, many seniors take out a reverse mortgage in Kamloops or Kelowna.
What are the advantages of a reverse mortgage?
- You can keep your house. No need to sell or move to free up money.
- You don’t have to make monthly payments. The loan and interest are paid back when you decide to sell or move.
- Your loan is a tax-free source of income.
- You can get your money how you like, as a lump sum, in regular payments as income, or as a combination of those two options.
- You only repay the fair market value of your home. That means you’ll never need to default on your loan or find other ways to repay it.
In Canada, reverse mortgages are primarily offered by HomEquity Bank’s Canadian Home Income Plan (CHIP). Your mortgage broker in Penticton or Salmon Arm can help you connect with the right lender and apply for a reverse mortgage.
Free up the money you’ve put into your home so you can enjoy your retirement years. Contact the reverse mortgage specialists at Kal-Mor Mortgages and Investments, the top mortgage broker in Vernon, serving Kamloops, Salmon Arm, Kelowna and Penticton. 250-549-3250.