Reverse Mortgage

You may or may not be familiar with reverse mortgages, but they do fill a niche in the Canadian Mortgage industry.

In a nutshell, a reverse mortgage allows elderly homeowners (60 yrs of age or older) to access the equity in their home (up to 40% of house value). The main advantage is the homeowner does not need to make any mortgage payments as long as they live in the house.

This is great for individuals who have most of their net worth tied up in a non liquid asset like their house. When they enter retirement and have a fixed income it can be difficult at times to make ends meet or afford unexpected expenses that can arise.

It can also be used by more savvy retirees who borrow against their property to invest and subsequently write off the interest. I feel the best use if for couples who have not saved enough for retirement and are considering selling their home to generate some cash flow.

Investor's Group conducted a survey last year and 35% of respondents stated they are providing some sort of care to their aging parents. 39% of those report they provide financial assistance of $6,000/yr on average to help their parents make ends meet.

This can result in financial stress on the caregiver. This is a perfect example where a reverse mortgage can be used to provide some liquidity to the parents and ease the burden on the children.

If you are interested in learning more about reverse mortgages and how they can help, please let me know.