Unlocking Retirement Income with Reverse Mortgages

Table of Contents

What is a reverse mortgage?
Benefits of reverse mortgage as retirement income source:
Reverse mortgage vs other retirement income sources
Why Reverse mortgage is a good idea for you

Published on July 3, 2024
4 min read

Meet John and Mary, a retired couple living in Toronto. They had saved diligently for retirement but as they aged, their expenses increased, and their fixed income became insufficient. They cherished their home; which was filled with memories of raising their children, and were hesitant to downsize. Instead, they opted for a reverse mortgage, allowing them to access the equity in their home without having to move. As Canada’s population ages, more and more retirees are seeking ways to maintain their standard of living while staying in their homes. According to an Ipsos survey commissioned by HomeEquity Bank, over 93% of Canadians desire to “age in place”. This growing trend, coupled with the country’s rising property prices has led to a surge in the popularity of reverse mortgages.

What is a reverse mortgage?

A reverse mortgage seems like a magic wand for homeowners aged 55 and older as it lets them access a portion of their home’s equity without the need to sell or move.

Benefits of reverse mortgage as retirement income source:

No Monthly Payments:

Unlike traditional mortgages, no monthly payments are required. The loan is repaid when the homeowners either sell the property, move out permanently, or pass away.

Flexibility

One of the key benefits of a reverse mortgage is its flexibility. Homeowners can choose to receive the funds as a lump sum, a series of payments, or a combination of both. This flexibility allows retirees to tailor their income stream to meet their specific needs, whether it be covering ongoing expenses or funding a major purchase or renovation.

Find out how much you could borrow using our reverse mortgage calculator!

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Reverse mortgage vs other retirement income sources

Reverse mortgage vs Line of Credit

When considering funding options for retirement, some may opt for a secured line of credit or a conventional mortgage. However, these options may not be available or suitable for many Canadians 55+. Secured lines of credit and conventional mortgages typically require monthly payments, which can be challenging for retirees living on a fixed income. Additionally, conventional mortgages may have stricter lending criteria, making them difficult to qualify for in retirement. Reverse mortgages on the other hand, are specifically designed for retirees and have more lenient eligibility requirements.

Reverse mortgage vs Downsizing

Some may also consider downsizing to fund their retirement, however in today’s high-priced market this can be easier said than done. Closing costs, real estate commissions, and moving expenses can eat into the sale proceeds, making downsizing less fruitful than it might seem at first glance.

Why Reverse mortgage is a good idea for you

For many Canadian retirees, a reverse mortgage can provide a valuable source of supplemental income, allowing them to maintain their standard of living while remaining in their homes. With flexible repayment options and no monthly payments required, reverse mortgages offer a practical solution to the financial challenges of retirement. A CHIP Reverse Mortgage from HomeEquity Bank allows you to cash in up to 55% of the value of your home in tax-free cash and it comes with a No Negative Equity Guarantee, where you will never owe more than the fair market value of your home, as long as you meet your mortgage obligations. A key advantage of a reverse mortgage is that you only pay back what you owe when you move out or sell your home, so your retirement income isn’t negatively impacted. You can find out how much you qualify for with a CHIP Reverse Mortgage by calling us at 1-866-522-2447 or by using our reverse mortgage calculator.

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