Reverse Mortgages: Too Good to be True? Maybe Not! Read On…

If you’re a homeowner, you understand how much it means to be able to stay put throughout the years. For one thing, your home is one of your biggest assets, with countless dollars and hours spent maintaining it. But more than that, your home represents something: a sense of personal place, a sanctuary from the world, and the anchor point tying you and your family to your community. With that in mind, it’s no wonder that so many Canadians entering retirement want to stay in their homes, but it’s not always so simple. Despite decades in the workforce and a lifetime saving, many people over the age of 55 still aren’t able to fully, comfortably retire, leaving them in a difficult financial dilemma: being forced to choose between their home and their lifestyle.

It might sound like all hope is lost for older homeowners looking to take advantage of the value of their home without actually selling it, but we’re here to share some good news: there’s another option. A CHIP (Canadian Home Income Plan) Reverse Mortgage is a type of secured loan that allows people over the age of 55 to secure up to 55% of the equity in their home, providing them with tax-free cash that can be spent however you see fit. And the best part? You don’t need to move out, sell your home, or lose control or ownership of the property.

Common reverse mortgage myths

With a topic as complex as loans and mortgages, there’s a fair amount of confusion around how certain financial products work. On top of that, there’s a number of myths surrounding reverse mortgages in particular, giving people the wrong idea about this potentially life-changing offering. 

It’s fair enough to be skeptical about something like a reverse mortgage—after all, it might seem like it’s just too good to be true. In fact, reverse mortgages are an excellent option for many retiring Canadian homeowners, allowing them to take advantage of the value of their biggest asset—their home—without being uprooted from their environment. Here’s a few common misconceptions about reverse mortgages that we’d like to clear up:

Myth #1: A reverse mortgage means you sign your home over to a bank

This is one of the most widely-held beliefs about reverse mortgages, but thankfully, it simply isn’t the case. You’ll never be asked to move out of your home or sell it in order to repay a reverse mortgage, and you always maintain control and title ownership of the property—not the bank.

Myth #2: There are restrictions on how you spend your loan

Another mortgage myth is that your CHIP Reverse Mortgage payout comes with strings attached. However, you’re free to spend your money however you like, whether you need to cover an unexpected expense, pay for renovations and home improvements, offer financial help to friends and family, travel, or simply enjoy retirement.

Myth #3: You’ll be stuck making monthly payments

One of the biggest reasons people steer clear of loans is avoiding mandatory monthly payments. But with a CHIP Reverse Mortgage, you don’t need to worry. You’re able to pay off the loan in installments, but they don’t have to be monthly, or even quarterly. In fact, you don’t have to repay your loan until you choose to move out or sell your home, meaning you can plan your repayment in the way that makes most sense for you and your budget.

Myth #4: You can’t take out a reverse mortgage until you’ve paid off your regular mortgage

Some people believe you can’t take out a reverse mortgage with any other outstanding debts secured against your home, such as a traditional mortgage. Not only is this not the case, but many people choose to sign on for reverse mortgages specifically in order to pay off their home mortgage. This lets you get on top of that debt quickly, and allows you to stop having to worry about monthly repayments.

Myth #5: You’ll wind up paying more than the house is worth

This mortgage myth is a fear held by many. No one wants to end up stuck in a bad loan, paying it back for what seems like forever—well beyond the actual value of whatever it was secured against. Fortunately, the CHIP Reverse Mortgage guarantees that you’ll never end up paying more than the fair market value of your home. We’re also happy to say that in almost two decades of providing reverse mortgages, the overwhelming majority (99%) of people have money left over once the loan is repaid, and all of that remaining equity goes straight back to you.

Now that you’ve learned more about some of the realities of reverse mortgages, you may be wondering if it’s the right move for you. In recent years, CHIP Reverse Mortgages have transformed from an occasional option for retiring Canadians to a common factor in many retirement plans. If you’re over 55 and own a home, a reverse mortgage could be the move that begins the next chapter in your life: one of flexibility and freedom.

At Our Reverse Mortgage, our highly experienced mortgage specialists have helped countless clients navigate the world of home equity release products, mortgages, loans, and everything in between. We pride ourselves on clear, honest communication, so that you can feel confident knowing you have all the information needed to make the right financial decision. A reverse mortgage might seem too good to be true, but it’s really not. To learn more about CHIP Reverse Mortgages and other financial products, or to get started, don’t hesitate to contact us today.