The low down on reverse mortgages;

If you’re looking to spend your retirement years in your existing home – a home that’s either completely or almost completely paid off – you may want to consider a reverse mortgage.

Unlike a Home Equity Line of Credit, a reverse mortgage is only available to individuals over the age of 55. Eligible homeowners can borrow up to 50% of the value of their home, and you don’t have to pay the money back until you move, sell or – gulp! – pass away.

The money can be used to supplement your income, pay for home renovations, cover travel expenses – or anything else you can think of. It can be issued in one lump sum or in installments.

The one catch is that the money you borrow does accrue interest – usually at a rate that’s about 1.5% higher than a regular five-year mortgage. This interest must be paid upon the sale of your house or the death of the homeowners.  This can be problematic if you were hoping to leave something behind for your children.

Nevertheless, it can be an excellent tool if used in the right situation. If you’re interested to find out whether a reverse mortgage is right for you, feel free to drop us a line to discuss it.

For more information about reverse mortgages, check out the Canada Mortgage and Housing Corporation and CHIP Home Income Plan websites.