A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property.
The loans typically do not require monthly mortgage payments. Borrowers are still responsible for property taxes, property maintenance and homeowner’s insurance.
Reverse mortgages allow “older” people (55+) registered on title to immediately access the home equity they have built up in their homes, and defer payment of the loan until they die, sell, or move out of the home.To be eligible, the home you’re using to secure a reverse mortgage must usually be your primary residence. This typically means you live in the home for at least 6 months a year.
Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month.
You may usually borrow up to 55% of the current value of your home. This money doesn’t affect the Old Age Security (OAS) or Guaranteed Income Supplement (GIS) benefits you may be getting.
The maximum amount you may borrow depends on:
- your age and the age of other individuals registered on the title of your home
- your home’s condition, type and appraised value
- your lender
Access your home equity Income Tax-Free.
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Sources: Wikipedia, www.canada.ca