A reverse mortgage is a widely emerging option for people who are 55 years and older and have own their home. Canada reverse mortgages simply consider the equity of the property owned by the borrower. This allows the borrower to get debt-free cash without having to sell the property. However, one must understand the various aspects related to reverse mortgage before applying for a loan.
In general, there are several reasons one would like to secure a reverse mortgage:
- One may want to develop income by making new investments.
- It helps in eliminating existing debt
- There may a need for immediate funding to establish new projects.
In Canada, the process of obtaining cash through reverse mortgage has become simple. In this process, the lender organization checks for your age, the equity of your property, and a few other factors that are necessary to be eligible for the mortgage. If you are with your spouse, your spouse too needs to meet the age requirement to make you both eligible for the loan. Essentially, the only reverse mortgage program working towards this entire process is the Canadian Home Income Plan, also commonly referred to as CHIP. It ensures that you have a smooth processing of your mortgage loan towards getting you the best rates for the equity you have defined.
Unlike the normal mode of availing mortgage loans where you are required to make regular payments monthly, in case of Canada reverse mortgage you get paid and the amount you receive is tax-free. Neither you nor your spouse needs to make repayments regularly since your equity provides the required security against the reverse mortgage you get. Based on CHIP’s regulations, if you are eligible for a reverse mortgage loan, you can receive up to 40% of your home value. So, the amount you can get purely depends on your age and your spouse’s age, the condition of your house and its locality, the appraised value and debts against your house, etc.
While opting for Canada reverse mortgage, you have the flexibility to decide how you would want to receive the loan amount. Once the reverse mortgage loan amount is decided and approved for you, you can choose to receive the entire amount as a lump sum, in two or three phases, or a planned withdrawal process. Any of these ways of receiving the loan amount depends on your requirements and reason for applying for a reverse mortgage. You or your spouse never needs to make a repayment of the amount you receive till the time you stay in the home. However, if you decide to sell your property or move out, you must make full repayment of the loan you have taken.
You are free to decide for what purpose you want to use the loan amount you have received. Canada reverse mortgages have all the flexibility of no regular repayments and no tax against the loan amount. However, it is always recommended that one should discuss with a mortgage broker to understand the advantages and disadvantages of a reverse mortgage in Ontario.
Canada Reverse Mortgages is your trusted CHIP Home Income Plan Lender. We work with seniors and their families all across Canada. Our dedicated staff of account experts will consult with you over the phone or in-person in the convenience of your home. With same-day approvals and funding in as little as days, this is the only call you have to make 1-866-920-2012. With our relationships with all lending institutions and banks, we work with your branch and financial planner to allocate the funds where and when needed.