Reasons to Use a Reverse Mortgage in 2023
Did you know that reverse mortgages are the fastest growing mortgage product in the country?
For so many Canadians, their wealth is tied to the equity in their home.
The reverse mortgage allows those who are 55 or older to use this equity with no obligation for future payments required. You don’t even need income or credit to apply!
With so much flexibility and versatility, many Canadians are considering the reverse mortgage to help them accomplish their goals and their family’s.
Here are just a few ways Canadians are using reverse mortgages in 2023:
To Help Kids or Grandkids Purchase a Home
We all know how hard it is for the current generation of first-time home buyers to get into the market or upgrade into a family home.
Reverse mortgages aren’t just for the person who holds the mortgage. They can be used as an early inheritance to your children or grandchildren, to provide them an extra down payment so they can purchase a home or upgrade into a family home if grandchildren are on the way.
By considering this, you get to watch your family benefit from the inheritance instead of them receiving it once you’ve already passed.
The money you access from the reverse mortgage is tax-free, so this often makes a lot more sense than pulling the money from your taxable investments.
To Start Retirement Early
Are you ready to start working less, and relaxing more?
Regardless if you’ve fully paid your mortgage off or not, you may be eligible to create a passive income for yourself by setting up regular monthly, quarterly or annual payments.
You can also use a reverse mortgage to simply setup optional payments, so if you don’t feel like making a mortgage payment you don’t have to!
Remember, the income you create from a reverse mortgage is tax-free so compare that with what you’d be taxed on employment or investment income, and using a reverse mortgage to supplement your retirement can often be the better strategy.
To Purchase a Vacation Home or Renovate Your Current Home
Reverse mortgages can be used to purchase second properties, like vacation homes or to renovate your existing home.
For example, we recently helped a women use the funds from a reverse mortgage to finish building a basement suite in her home that she can rent out for passive income!
Because she is a senior living on a strict budget, the banks would not approve her for the money she needed to complete the renovation.
Fortunately, reverse mortgages are not based on your income or even credit but your age and the value of your property. For this reason we were able to get her the money she needed to finish the renovation.
Now that the basement suite is finished, she has created an extra income for herself, improved the value of her home and STILL has optional payments built in so if she doesn’t want to make a mortgage payment, she doesn’t have to!
Talk about best of both worlds!
Do you have questions on whether a reverse mortgage is right for you?
As an independent advisor for Canada’s largest mortgage brokerage, I will be here to educate and inform you on all your options, not just the reverse mortgage. Click here to schedule a call with us today, to see how we can help!