A Canadian Reverse Mortgage is a financial tool that provides Canadian seniors with cash flow from the equity in their homes. In general, no payments are expected to be made on a reverse mortgage until the home is sold. A Canadian Reverse Mortgage can offer substantial monthly cash savings when compared to a traditional mortgage because no repayments are required while you reside in the home. These savings can amount to hundreds or even thousands of dollars a month.
Let’s use an example to show how a Reverse Mortgage can help:
Imagine a couple, let’s call them Albert and Ruth. Albert is 72 and Ruth is 68. They’ve retired and are living on a fixed, limited income. Their home is worth approximately $410,000 and they have a mortgage of approximately $79,000 remaining. In addition, they owe approximately $2,500 in credit card debt from a trip they took to see their granddaughter graduate. Combined, their monthly payments are approximately $950 per month and it will take another 10 years to pay off the mortgage.
With their limited retirement incomes, Albert and Ruth were finding it difficult to make the minimum monthly payments on their mortgage and credit card debts. Needless to say, once those had been paid for there wasn’t much left over for Albert and Ruth to enjoy the simple pleasures in life.
Using a Horizon Equity Reverse Mortgage, a Canadian Home Income Plan was arranged for Albert and Ruth. Together, they qualified to obtain $140,000 of their own home equity to eliminate their mortgage and credit card debts, and put enough aside so they wouldn’t have to use their credit cards again for important family events, vacations, and medical care.
Most importantly, Albert and Ruth no longer have to make any debt payments, which freed up $950 a month in cash flow. Not having that payment every month has made life a lot sweeter for both of them so they can enjoy their time together without having to worry about money.
Key Points to Remember about Canadian Reverse Mortgages:
We hope that answers your question, What is a Reverse Mortgage. Please contact us to learn more.