Reverse Mortages Provide More Options For Canadian Seniors
Unlike the U.S. market, Canada does not have as many mortgage options for seniors looking to tap into their equity during retirement.
One solution that is gaining more interest for those over 60 years of age are reverse mortgage programs.
Reverse mortgages have actually been around for quite awhile, but have only become marketed on a regular basis in Canada over the last few years.
The reason for their growing popularity again comes back to choice and options related to retirement financing of home equity. According to Statistic Canada, 77% of a senior’s net worth is tied up in their home equity and over 1.5 million seniors own their homes mortgage free.
So with the bulk of retirement assets tied up in real estate, it only makes sense that owners may want to draw against their investment during their senior years.
The alternative to mortgage would be to sell the property and downsize into a lower cost property in order to free up cash. But some consumer based research reports also indicate that over 80% of seniors do not want to move, so selling the home to extract value is not an option for them.
In the 1990’s retirement and pension funds benefited significantly from the stock market and as a result, seniors tended to use their home equity for estate planning purposes. However, in the last 10 years, stock market returns have been down, leaving many with inadequate sources of capital to finance retirement, especially with the average life expectancy continually going up.
Add to all of this the fact that the overall population is aging as baby boomers reach retirement age and you can see that there will continue to be a growing demand for financial vehicles like reverse mortgages that allow retirees to more easily tap into their retirement resources without having to up root their lives at the same time.
While reverse mortgage programs do have certain restrictions, they are much easier to qualify than a traditional mortgage and no payments are ever required on an approved loan for as long as the borrower lives in the home being mortgaged.
And the funds being generated can be used for any purpose from supplementing existing cash flow, to starting a hobby, home improvement, in home medical care, travel, helping family members, and so on.
If you’re considering a reverse mortgage or would like to know more about how they work and if they may be a fit for your situation, I suggest that you give me a call and I’ll make sure you get all your questions answered.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel