When considering whether or not a Canadian Reverse Mortgage is for you, you should take the time to do some research and speak with a knowledgeable Reverse Mortgage Specialist. These are three of the common factors you should consider before obtaining a Reverse Mortgage.
1) If you don’t plan on living in the house for long then you would end up having to pay out the loan, plus interest, as soon you decide to sell the house. On the other hand, if you plan to live in the house until you pass away, you will get more value out of the reverse mortgage loan.
2) Consider that once you pass away, the loan and interest will have to be repaid up to the value of your home. If you have heirs who want to live in your house, and there is not enough cash in your estate, your heirs may have to sell the property to pay off the loan. If your intention is to keep the property in the family, you’ll want to make sure heirs will have the ability to pay off the loan, or refinance the property based on their credit application.
3) You should take your financial situation into consideration when making the decision to obtain a reverse mortgage. The maximum loan to value for a reverse mortgage is 40% meaning you would only receive 40% of the value of your house in cash. If you are in debt, will the cash you receive through a reverse mortgage be enough to pay off your debt? If you are not in debt and are looking to supplement your income you should determine what you want to use the cash for and how much money you will need to achieve these goals.
If you would like to explore these questions or any others relating to a Canadian Reverse Mortgage, please contact one of our Canadian Home Income Plan mortgage specialists for a free, no-obligation consultation.