A scenario I observe all too often and a situation that many of us will find ourselves in. We are living in homes purchased years ago for a fraction of today’s market value.
Wouldn’t it make sense to tap into some of that equity for any number of reasons?
A kitchen or other home renovation, helping our children with their own goal of home ownership, taking the vacation of a lifetime, purchasing that little piece of lakeside heaven or maybe just increasing the quality of everyday life. There are other more practical reasons such as debt consolidation or being able to afford home care instead of moving to a retirement home. All are equally eligible uses of a reverse mortgage, after all it’s your money!
Monthly income may have dropped upon reaching retirement age which makes qualifying for a conventional mortgage under the new rules out of the question. Alternative solutions can be limited at this stage. Private mortgages are available and can charge rates of interest between 8% and 12% depending on the area and type of property. Lines of credit may already be in place at less expensive rates, but balances could be nearing their limits. Increasing these limits may not be an option if the income is not there to qualify. Monthly payments are required with both these options but not necessary with a reverse mortgage, it’s your money!
Thank goodness for the current state of British Columbia’s real estate market. We are fortunate to be living in a province that has experienced a substantial increase in property values over the last ten years. Why not utilize a portion of that equity to improve your life? We want to stay in the homes and neighbourhoods we are comfortable in. For me it is having my pets, my garden and room for my children when they visit. A reverse mortgage allows you to draw cash from the equity you have built up over the years. You can receive a lump sum, a monthly/quarterly payment or combination of the two. A reverse mortgage just may be something to consider.