With Canadians living longer, declining pensions and increased health care costs, reverse mortgages are on the rise. Reverse mortgages can be a smart financial tool in the right situation, helping homeowners access the equity they have accrued in their home. It can allow people to stay in their homes longer and provide funds for retirement such as travel & living expenses.
What is a reverse mortgage?
A reverse mortgage is a loan that allows you to get money in the form of a lump sum or periodic payments, from your home equity without having to sell your home.
Traditional refinance mortgages allow homeowners to take equity out in the form of a line of credit or cash, however they do have repayment obligations. In the case of a home equity line of credit you are required to pay a minimum interest payment and with a traditional mortgage you would make a regular monthly payment of principal and interest.
With a reverse mortgage, there are no payments due. The interest accrues and the loan principal plus interest is paid out either when the home sells or the last remaining owner passes away. *Note: there are no fees for this service through Olympic Mortgages.