When you are facing retirement, you don’t want the burden of being in debt. That’s why you should explore different options when it comes to paying off your debt and ensure that your financial situation is as good as it can be. One of the options available to homeowners is a reverse mortgage, which can be a great idea to consider.
It is estimated that the number of retired Canadians have grown almost 20 percent during the last six years, to around 8 million people. It’s the fastest growing population segment in Canada and of course there is a growing concern that there will be many people who still retire with debt.
What is a Reverse Mortgage?
A reverse mortgage refers to the ability to take money out of the equity of your property, in monthly installments, to provide a stable income and provide financial security. This is while you can still stay in your home, which is an added benefit. This way you’ll have a monthly income but remain in control and still own your home.
The ability to have a steady income when you’ve retired is a great benefit to have. Not only will you have peace of mind knowing that you have money coming in every month, you are still the homeowner and will remain in charge. This means you still maintain your financial position as well.
Reverse mortgages are not something that everyone is aware of, but it’s a great alternative to borrowing money somewhere else to settle your debt. But you don’t have to take monthly payments – you can choose to have one lump sum paid to you, in exchange for a percentage of your home.
For the duration of this agreement you remain the owner of the home, while your equity decreases. When you sell the home or when you pass away, the lender will sell the home to recover the money that was paid over to you. After this has been settled, the remaining equity left in your home goes to you or whoever inherits your assets. In some cases, your heirs may also have the option to repay the amount paid to you, without selling the home.
If you are facing retirement and want to explore the option of a reverse mortgage, speak to an experienced mortgage broker at Mortgage Guys. We can help you to understand your options and make the right financial decisions.