Reverse Mortgages Explained...

Great article from our friends at Home Equity Bank on the differences between a reverse mortgage in Canada and USA.  We have a couple specialists on our team and wed be happy to support any inquiries on if a reserve mortgage is suitable for your family.  Full article credit at bottom of article.

How much do you really know about reverse mortgages? Maybe you know that reverse mortgages can help Canadians 55+ access the equity in their home, tax-free. But there are many people who mistakenly think that Canadian reverse mortgages are just like those offered in the U.S. As Canada’s leading provider of reverse mortgages, HomeEquity Bank can help set the record straight.

Canadian reverse mortgages are an increasingly popular borrowing option for homeowners 55+.

Unlike in the U.S. where features and rates can fluctuate greatly between the many providers, HomeEquity Bank, the leading provider of reverse mortgages in Canada, is a federally regulated Schedule 1 Bank. This means that HomeEquity Bank has the same oversight and regulatory obligations that the big 6 Canadian banks have. With a trusted and secure bank backing the CHIP Reverse Mortgage, it becomes a great alternative to selling your home, and may be a better-suited lending solution when compared to a second mortgage or a line of credit. Homeowners can retire stress-free, without the worry of monthly payments. Plus, funds are tax free and don’t impact your OAS or CPP.

Here are some key differences that set our reverse mortgages apart from those of our American neighbours.

In Canada:

• Eligibility amount is up to 55% of your home’s value. Our conservative lending amount serves two purposes: Firstly, the amount you qualify for increases with age as the cost of living is expected to increase and other sources of retirement income deplete. Secondly, we provide a No Negative Equity Guarantee which ensures the loan balance doesn’t exceed the fair market value of your home.
• Closing & administrative closing costs are $1,795. There are also standard legal and appraisal fees payable to third parties, as with any mortgage.
• No monthly payments are required.

In the U.S.

• Eligibility amount is up to 80% of your home’s value, according to the Federal Housing Authority.
• Closing & administrative closing costs to a max of $6,000. A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.
• Monthly payments are required.

Tens of thousands of Canadians are already using the funds from a reverse mortgage to supplement their monthly income, pay off debt, travel, purchase a second property and more. To see how a reverse mortgage could work for you, contact The Westlake Team, Dominion Lending Centres Mortgage Broker today!