Recently, there have been a lot of talks about reverse mortgage in the media and even in the social Medias. The new survey conducted shows that almost 55% of the people in Canada who have attained the age of 55 and above are worried that they will run out of their saving before they finish their first ten years of retirement.
Due to this reasons most individual opt for this program so that they can supplement their savings and income. However this people they find if difficult to choose a reverse mortgage that will not stress them because they often see this program as a burden. Some alternatives need to be considered. This article will outline all the things you need to know about reverse mortgage in Canada.
What is the meaning of reverse mortgage?
It is a plan or program that allows all homeowners who have attained the minimum age of 55 years to borrow a loan up to 50% of the value of the home they own, unlike other loan plans. With this program, you don?t have to proof your income to anyone or anywhere. If you go for this loan, you can use it doing anything, and you?re not required to pay this money or interest until the time you decide to sell it.
Merits of program
If you look at it carefully, you will see that there are a lot of advantages than disadvantages
You are not forced to make any regular payments
It is easy to qualify since you don’t have to provide you income proof.
The loan is tax-free hence it doesn?t interfere with your pension or Guaranteed Income Supplement.
You?re the one to decide how to receive your cash
You remain the owner of the property.
Demerits of this plan
All of this merits above looks great but don?t forget: if something seems too good to be true, it should be, or it is. The following are disadvantages of taking this type of a loan:
In Canada, only one offers the service (Canadian Home Income Plan) by the HomeEquity bank.
If you borrow more with more equity the interest accumulates very quickly.
The interests are a very high if you compare it with other mortgage rates.
There are two main ways to get out of this program that is selling your property or death.
If you die amount of money, you borrowed plus the interest that has accumulated has to be paid for a limited period.
How does one qualify for this in Canada?
In Canada, it is very easy to be eligible for reverse loan since they look at five things only (age, current interest rates, and the value of your home and location of your property)