The Toronto housing market has witnessed an upheaval over the past two years. According to market statistics from the Toronto Regional Real Estate Council, the average home sale price in Toronto is up 18.5 percent from last year. The rise in housing value has boosted interest in reverse mortgages among homeowners trying to boost their 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 aged 55+, which allows them to access their own funds and convert them into tax-free cash. A reverse mortgage eliminates the fear of losing your home because you will never have to move or sell your home, even if the value of your home changes. Here are some benefits of taking it.
1. There are no restrictions on how you spend your money
Whether you want to increase your monthly cash flow, renovate your home, cover medical expenses or take a vacation, funds from a reverse mortgage can help. There are no restrictions on how you choose to spend your money, allowing you to access your money at any time if you meet the criteria for a reverse mortgage.
To be eligible for a reverse mortgage, the homeowner and all persons listed on the title deed must be at least 55 years old. You will be asked to provide all of this information in your home loan application and seek independent legal advice before contacting a lender.
2. You do not need to repay unless you move / sell
One of the best things about a reverse mortgage is that you do not have to repay the loan unless you sell your property or move to a new location. However, you may need to repay the loan if you are unable to pay property taxes or homeowners insurance.
Unless you fall into the categories listed above, non-payment of the loan can be a significant relief for many homeowners with financial constraints.
3. Choose how to withdraw your money
You have the financial flexibility to decide how you want to get your money out of a reverse mortgage. You can get the total amount immediately or distribute it in monthly deposits. This option allows you to allocate your money according to your individual needs.
If you are spending your holiday money, you may need it immediately as a lump sum. On the other hand, if reverse mortgages are a source of additional income, you can choose to receive monthly payments.
4. No hidden charges, taxes or monthly payments
A reverse mortgage will give you peace of mind because it does not consist of hidden charges, taxes or monthly repayments. Access to this tax-free cash allows you to get a clear picture of your financial situation at no extra charge or expense.
Understanding the terms of the loan before applying for a reverse mortgage is vital. If you are interested in getting it out, talk to a specialist to determine how much tax-free cash you are entitled to receive and resolve any doubts about the process.
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