The reverse mortgage is a residential mortgage program designed for retirement planning purposes.
In Canada, their is a minimum age requirement of 60, and if there are joint borrowers in the household (couples), both have to be at least 60 years old as well.
There are also no income requirements or credit requirements in the application process.
These programs focus on homeowners who have paid for their home in full or have a small mortgage still outstanding.
Homeowners that qualify, will be able to receive mortgage financing ranging from 10% to 40% of the fair market value of their home less any outstanding charges registered against the property.
Currently, Canadian reverse mortgage programs can provide a minimum mortgage amount of $14,500 and a maximum mortgage of $500,000. Reverse mortgages are available all across Canada for single family dwellings, duplexes, townhouses, and condos provided that any of the above do not include a property larger than 30 acres.
The interest rate is fixed for one year at a time with any necessary revisions to the rate being made at the end of the interest term each year.
Applicants must own and occupy the property being mortgaged and must continue to live there while the mortgage is in place. In the event that a spouse were to pass away, the mortgage can continue until the remaining spouse sells the property or passes away.
Even though the borrower(s) must occupy the home with the reverse mortgage in place, they may still be allowed to rent out the property for short periods of time without violating the terms of the mortgage.
The mortgage is also transferable in the event the owner(s) wish to move to another location.
Mortgage advances can be received in the form of a lump sum or payments over time.
Outstanding balances can also be repaid at any time, but will be subject to whatever prepayment penalties are written into the mortgage agreement.
There are no payments requirements for the life of the mortgage and the borrower(s) will never be asked to repay the loan.
In order to better understand how a reverse mortgage may benefit you or a family member, I suggest that you give me a call so that we can go over the programs in more detail and get all your questions answered.