With over 20% of Canada’s population over the age of 65 and people living longer than ever, the demand for financial solutions for home health care and debt relief is on the rise. Let’s take a closer look at this often-misunderstood mortgage product. Now let’s look at the four main reasons why people opt for reverse mortgages:
#1: Debt Consolidation
Many families are feeling the strain due to the rising cost of basics like utilities, gas, and food. Homeowners juggling multiple debts can use a reverse mortgage to tap into their home’s equity for cash, which can be used to pay off those debts. This strategy reduces monthly costs and the interest paid, making life more affordable.
#2: Asset Preservation
Many homeowners prefer to stay in their own homes as they age, rather than moving to costly retirement homes. To accommodate their changing needs, home modifications may be necessary. Instead of cashing in investments, a reverse mortgage can provide the necessary funds for these upgrades.
#3: Supplementary Income
You can use the equity you have built up over time to supplement your retirement income. Options include taking a one-time draw, a monthly draw, or drawing funds as needed. Use the money however you wish, with interest accruing only after you make a draw.
#4: Second Home Purchase
A lesser-known reason some people choose a reverse mortgage is that it can be used to purchase a second home. This means you can use the equity in your primary residence without selling it, allowing you to buy another property, such as a cottage, for your family to enjoy. This makes owning two properties more achievable, as it alleviates the concern about making extra monthly mortgage payments.
Conclusion:
Like any financial product, a reverse mortgage requires careful consideration. While it eliminates monthly mortgage payments, there are other factors to consider. I am happy to walk you through everything you need to know, help you determine if this is a good option for you, and answer any questions you may have.
