A reverse mortgage is a special type of mortgage, which is especially designed to meet the changing monetary requirements of an older clientele. Reverse mortgages are widely popular amongst Canadian senior citizens. To them, a reverse mortgage is an easy, flexible, safe and feasible option for accessing some portion of their home-equity that they may use to fulfill their financial needs. The best thing about Canadian reverse mortgages are that it won’t require any regular payment schedule, unlike traditional online mortgages. Moreover, there is no limit on the tenure of a reverse mortgage in Canada.
Eligibility criteria for Canadian reverse mortgage
There are a few criteria that a person must meet to qualify for a reverse mortgage in Canada.
• The person or both the spouses (if married) should be at least 55 years old
• The person should live in Canada and own a home
Facts about Canadian reverse mortgages
Here are some important facts about reverse mortgages in Canada.
• Loan amount – The amount of loan that a senior can take out depends on her age, home value and location of the home. The minimum amount of reverse mortgage is 20,000 USD and the maximum amount of reverse mortgage is 750,000 USD.
• Associated expenses –Therefore, the borrower needs not to pay any closing cost from his/her pocket. It is directly deducted from the reverse mortgage funds.
• Pre-approval of higher amount – In Canadian reverse mortgage, a borrower may get pre-approval for a higher amount even if the individual doesn’t require it right now. The individual can take out a small amount as advance and then the balance amount whenever required.
• Tax deduction – Money taken out through Canadian reverse mortgage is absolutely free of tax. The borrowers are not required to pay any tax toward their reverse mortgage amount.
• Effect on government benefits – Reverse mortgage in Canada doesn’t affect Guaranteed Supplement Government benefits or Old Age Security benefits that the borrower is already getting.
• Devoid of monthly payments – As long as the borrower and/or his or her spouse stay in the home, he/she doesn’t need to pay any monthly payment toward the reverse mortgage.
• Ownership – Reverse mortgage is different from selling a property. Canadian reverse mortgage ensures that the property will be held in the name of its owner (the borrower), like conventional online mortgage.
• Protection of the estate – Reverse mortgage ensures that the borrower or the successors won’t be charged more than the actual appraised value of the property.
In Canada, a reverse mortgage loan is popularly known as a home income plan. Canadian Seniors, who want to preserve their investments for potential growth and income, can consider reverse mortgage as an effective option.