The Toronto housing market has witnessed an uproar over the last two years. According to the Toronto Regional Real Estate Board’s market statistics, the average selling price of a home in Toronto has increased by 18.5 percent compared to last year. The rise in home values spiked an interest in reverse mortgages among homeowners looking to boost retirement income. So, what is a reverse mortgage, and how can it help you?
A reverse mortgage is a type of loan for Canadian homeowners age 55+, allowing them to access their home equity and convert it into tax-free cash. A reverse mortgage eliminates the fear of losing your home because you will never be forced to move or sell your home, even if your home value changes. Here are some benefits of taking out.
1. No Restrictions on How You Spend the Money
Whether you want to increase your monthly cash flow, renovate your home, cover medical expenses, or take a vacation, the funds from a reverse mortgage can help you. There are no restrictions on how you choose to spend the money, allowing you to access your funds at any point if you’re eligible for a reverse mortgage.
To be eligible for a reverse mortgage, the homeowner and all the individuals listed on the home’s title must be at least 55 years old. You will be required to mention all this information in your mortgage application and seek independent legal advice before approaching a lender.
2. You Don’t Have to Repay Unless You Move/Sell
One of the best things about a reverse mortgage is that you don’t have to repay the loan unless you sell your property or move into a new place. However, you may need to pay the loan back if you fail to pay your property taxes or homeowners insurance.
Unless you fall under the categories mentioned above, not having to pay the loan can be a significant relief for many homeowners with financial constraints.
3. Option to Choose How You Receive Your Funds
You have the financial flexibility to decide how you want to receive your funds from a reverse mortgage. You can take the total amount at once or spread it into monthly deposits. This choice allows you to allocate your funds according to your individual needs.
If you’re taking out the money for a vacation, you may need it at all once as a lump sum. On the other hand, if the reverse mortgage funds are a source of supplemental income, you can choose to receive monthly payments.
4. No Hidden Fees, Taxes, or Monthly Payments
A reverse mortgage will give you peace of mind because it consists of no hidden fees, taxes, or monthly repayments. Accessing this tax-free cash allows you to gain a clear picture of your financial status without the burden of repayment or additional expenses.
Understanding the loan terms before applying for a reverse mortgage is crucial. If you’re interested in taking out a it, speak to a specialist to determine how much tax-free cash you are eligible to receive and clear any doubts about the process.
Also read: 4 Advantages of Getting Quality Mortgage Broker Services