A reverse mortgage enables individuals aged 60 and over to tap into their home’s equity, providing additional funds to enjoy their retirement whether that’s for travel, pay medical expenses, home renovations or just make everyday living more comfortable.
Crucially, a reverse mortgage allows you to retain ownership of your home.
With a reverse mortgage, you are not required to make regular repayments. Interest is calculated on the outstanding balance and added to your loan monthly. You can make voluntary repayments at any time to reduce the balance and the interest charged.
The total loan amount, including accumulated interest, becomes repayable when you permanently move out of your home, whether by selling the property, moving into long-term care, or passing away.
To qualify, you must be over the age of 60 and either own your home outright or have a standard mortgage that can be paid off with the reverse mortgage. The amount you can access is determined by your age and the value of your home.
You remain the registered owner of the property, allowing you to continue living in your home and enjoying your community’s benefits for as long as you wish.
There are no regular loan repayments necessary. Interest is calculated on the outstanding balance and added to your loan.
The repayment amount for your loan will never exceed the net sale proceeds of your property.
Lenders may not offer reverse mortgages on some types of properties (e.g. farms, retirement properties).
A reverse mortgage allows you to stay in your home for as long as you wish, but it requires you to reside in the home or sell it. You cannot rent out your home and travel, or move into care, without selling the property and repaying the loan.
Since you aren’t making regular repayments on a reverse mortgage, the effect of compounding interest can significantly increase your loan balance. This can erode the remaining equity in your home. Depending on the housing market at the time of sale, this could result in a substantial financial loss.
Talk to the Mortgage Team to find out more about your own situation. You can book a time with them here for an initial, no obligation chat.
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