Do You Qualify for a Reverse Mortgage in Canada?

Do You Qualify for a Reverse Mortgage in Canada?

A reverse mortgage is a way for older homeowners to receive back some of the equity in their home without having to move as they would if they sold their home. The money paid is based off a percentage of the current value of the home minus any debts or liens against it. Homeowners can opt to either take the money in installments, in one lump sum or a combination of both. The money is tax-free, can be used for whatever the owners need and the home stays in their possession for the remainder of their life.
Reverse mortgages do not affect any government or other pensions the homeowner is currently receiving or due to receive in the future. The owners are required to continue maintaining the property as well as paying all property taxes and continuing to keep fire insurance on the property just as they had in the past. Heirs are never required to pay more than fair market value on the home after the homeowner dies and no payments are required towards the reverse mortgage loan unless the homeowner chooses to move or sell. Homeowners are never asked or expected to sell or move from the home at any time. They do not need to meet any specific financial criteria as they would with a typical loan, so their current credit rating is unimportant.

Do You Qualify for a Reverse Mortgage in Canada?

If you are wondering, there are some very simple guidelines for you to consider. First of all, in order to qualify for a reverse mortgage in Canada your name must be on the title of the property being considered. The property must be located in Canada and it has to be your principal residence, with at least one of the property owners residing in the home full time. You also must be at least 55 years old in order to qualify.

With a reverse mortgage you will only receive a maximum of 50 percent of the appraised value of the home. All debts, second mortgages and lines of credit against the home will be deducted from this amount and the remaining amount must be at least $20,000 in order to qualify for the program. If you choose to sell your home within three years of obtaining the reverse mortgage you will be required to pay a pre-payment interest penalty along with your scheduled payments.

If you feel you qualify and would like more information, contact a financial professional to get started.

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