Reverse Mortgage

Reverse mortgages are commonly used in the following two scenarios:

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• A homeowner wants to access the equity in their primary residence to meet their needs without having to qualify for mortgage financing using traditional lending guidelines.

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• As more people carry mortgages into retirement, homeowners can use reverse mortgages to pay out conventional mortgages. The advantage to doing so is that a traditional mortgage requires a monthly principal and interest payment, whereas a Reverse Mortgage does not.

 

A Reverse Mortgage can also be a great tool to help people remain in their homes as long as they want to. Many Canadians over 55 find their expenses increasing faster than their indexed pension income. When this happens, either debt accumulates on credit cards or lines of credit, and each requires a minimum monthly payment. This type of debt can often be challenging to pay off, adversely affecting monthly cash flow and leaving the borrower stuck making minimum monthly payments indefinitely.

In too many cases, adults over the age of 55 are simply choosing to go without having their basic needs met. In many of these situations, though, they are living in a home that is just about paid off or may, in fact, be owned free and clear.

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While we recognize that the old-school way of thinking was always to leave as much as possible for the children, it can translate to parents living with all kinds of financial and even medical stresses that their children are unaware of.

 

Many of our parents followed old-school thinking: keeping personal finances to themselves regardless of whether things were going well or not. In every situation we have seen, though, where adult children found out that their parents were struggling, their priority was for their parents to take care of themselves and enjoy their lives.