When assessing mortgage needs different factors come into play. The length of a current mortgage, the equity built up in a property in addition to how much of the mortgage is already paid off all come to play when determining future mortgage decisions.
Financial needs change over time as life moves us forward. For those Ontarians who are 55 or older, financial needs may include helping out adult children and grandchildren, pressing home renovations, the need for an additional source of income or perhaps access to funds for travel and future retirement plans.
As the equity in your property increases, financial options will increase as well. Ultimately, owning your property outright will give you the most financial flexibility. Mortgage and loan options are available to help older Ontarians reach some of their financial goals by tapping into arguably your biggest asset- your home.
Reverse Your Fortunes- Consider Ontario Reverse Mortgages
Many older Ontario based home owners are not aware of the different options open to them. As a result, many turn to Home Equity Lines Of Credit (HELOCs) as a way to finance immediate or anticipated needs and goals.
Although a line of credit using equity as collateral may suit some, there is another mortgage option that is well worth looking into. Reverse Mortgages such as the Government- offered Canadian Home Income Plan (CHIP) or the PATH home loan offered by Equitable Bank can be a great solution for those 55 and over.
So what exactly is a Reverse mortgage? In simple terms, a reverse mortgage is a home loan for homeowners who are 55 and older which does not require a monthly mortgage payment. The loan itself is not required to be paid off until the end of the negotiated end of the mortgage term. The minimum loan amount must be 25,000 dollars. A reverse mortgage gives the homeowner access to equity built up in the property and can be distributed as either:
- one lump sum
- set amounts on agreed timetable
- monthly designated amounts.
If you meet the following criteria you are eligible for a reverse mortgage:
- Age– you must be 55 or over
- Homeownership– You must own your own home
- Home Value– The value of your home must be a minimum of 250,000 dollars
- Title- all those that are on title to the property must be on title on the reverse mortgage
- Primary Residence– The property that is used as collateral on the loan must be the primary residence of the applicants. This means that the property must be lived in for a minimum of 6 months of the year.
When it comes to reverse mortgages a borrower is allowed to tap into equity built up in his/her property. Qualifying is very straightforward and by obtaining a reverse mortgage you can access up to 55% of the value of your home!
What are the Advantages of Reverse Mortgages?
When assessing whether a reverse mortgage may suit your needs it is helpful to be cognizant of the some of the advantages pertaining to this mortgage option. In no particular order some of the advantages include:
- Access Considerable Funds– If you are very close to paying off your mortgage or own your home outright, the reverse mortgage allows you to access up to 55% of the value of your home which could result in access to considerable funds.
- Tax Friendly– The payments (or lump sum payment if you choose this option) are not taxed and you will not be making mortgage payments which means that you will not be adding financial obligations to your monthly budget.
- Flexibility– The different payment plans allows for you to access your equity in one lump payment or provide for monthly payments. This flexibility in accessing funds will be able to suit your lifestyle and long-term financial needs.
- You are Able to Stay in Your Own Home- You will be able to enjoy the house that you have made home and developed so many memories in. You will also be able to take advantage of any appreciation in the price of your property.
- You Choose How to Spend the Money That You Receive– The reverse mortgage does not put any restrictions on how you choose to use your funds. This again speaks to the overall flexibility of this type of mortgage loan.
- No Need To Access Registered Accounts- By tapping into the existing equity in your property, you will not need to touch other registered accounts you may have such as Tax Free Savings Accounts (TSFAs) or Registered Retirement Savings Accounts (RRSPs). Remember the payments you receive will not be taxed. Why take out funds from other accounts with tax penalties. Additionally your payments from other retirement sources will not be impacted by taking out a reverse mortgage on your property.
So What About the Cons?
- Slightly Higher fees and Interest Rates– The fees and interest rates assigned to reverse mortgage loans may be higher than traditional mortgages or lines of credit such as HELOCs. The interest rates do remain lower than other mortgages such as second mortgages and certainly lower than what most credit cards charge!
- Early Repayment Charge– If you choose to pay back the mortgage before the end of a period of five years you will face an Early Repayment Charge. You must weigh how much this charge will impact your finances before choosing to pay back the mortgage before the end of the mortgage term.
- Equity Has Already Been Accessed– By tapping into a substantial amount of your existing equity with a reverse mortgage, you may not have the same ability to tap into further equity with a future loan.
- Estate planning may be impacted– if the owner(s) pass away during the course of the loan, beneficiaries must pay off the loan and any interest owing.
Common Misconceptions Held Concerning Reverse Mortgages
Although many older adults may have contemplated a reverse mortgage a lack of clear understanding or general reluctance may have stood in their way of applying. Some of the myths that surrounding reverse mortgages include:
- Only for the poor – It is actually the opposite. Your property will be appraised and the more equity owing the higher the mortgage loan acceptance. Seniors in very good financial standing are the most qualified for reverse mortgages.
- Much High interest rates- Interest rates for reverse mortgages are generally higher on average but are not considerably higher than traditional 30 year fixed rate loans.
- Bank will own my home– The bank will not take possession of your home. You will still own it. A reverse mortgage is just a mortgage.
- Can’t sell your home– If you choose to sell your property you will need to pay off the loan but this will generally be included within all the closing costs. Remaining equity will not be affected.
Is There a Catch?
Too good to be true? Still not convinced? As most things in life there must be a catch? Reverse mortgages have obvious advantages. They are attractive to those that have considerable equity built up in their home.
If there is a catch, it comes down to the reality that you will be paying fees on the mortgage, both application and closing fees. It is also a reality that gradually the equity in your home will be depleted. To offset the shrinking of equity over time, your property will most likely appreciate and this equity is yours to enjoy!
Mortgage Broker Store is Here to Help
Let Mortgage Broker Store steer you in the right direction when contemplating reverse mortgages. With a network of lenders across Ontario and countrywide, we will work diligently to facilitate your mortgage needs moving forward. Please feel free to contact us with any further questions you may have.
For services in Cities and Towns across Ontario, please see below for more details:
Reverse Mortgages in Ontario
Ontario homeowners take pride in their homes. You have worked hard to pay off your principal over the years and look forward to owning your home outright. If you are 55 years or over your financial goals may have changed. You may also be in the enviable position of having paid off the principal of your mortgage loan or the bulk of it. If you are looking to pay for upcoming expenses such as possible home renovations, helping grandchildren or your adult children with finances, don’t take a personal loan, tap into the equity of your house with a reverse mortgage. Reverse mortgages can help you achieve peace of mind while taking advantage of the equity in your valued home.
Mortgage Broker Store can help you in your quest for a reverse mortgage. We are in the enviable position of having access to a vast network of Ontario based private lenders that will answer any question you may have. We will sit down with you and take you through the process of applying for a reverse mortgage. You have worked hard to own your home now make your home work for you. Learn more about Reverse Mortgages in Ontario
Second Mortgages in Ontario
When finances may be tight and credit may be a problem, looking into various lending options using your biggest asset can provide a sensible solution. Ontario homeowners can take advantage of existing equity in their home to take out a second mortgage loan secured against their property. If your credit score has been damaged as an Ontario homeowner you can turn to Ontario based private lenders to negotiate a secured second mortgage.
Mortgage Broker Store is here to help Ontario homeowners with any second mortgage applications. If the banks have turned you away we will be able to look to criteria beyond credit worthiness to help secure a second mortgage loan on your property. With a network of established private lenders across the Province, we will be able to work with you to tap into your home’s equity to take out a second mortgage. We will help free up money in your home to put towards immediate financial concerns such as home renovations, student loans or easing the strain of your primary mortgage. Learn how to get a Second Mortgage in Ontario
Private Mortgage lenders In Ontario
Ontario homeowners have a wide range of options when it comes to choosing a lender. Generally lenders will fall into 3 broad categories which include A lenders ( big banks), B lenders ( credit unions and trust companies) and C lenders ( private lenders). With increasingly stringent criteria imposed on Ontario homeowners when applying for mortgage loans by A lenders, many Ontario based borrowers turn to B lenders to apply for financing. If credit is in issue, however, these borrowers will not qualify for a mortgage loan. Don’t despair, private lenders will be able to negotiate loans based on other criteria including existing assets, all sources of income and the appraised value of your home.
Mortgage Broker Store is here to help Ontario homeowners with any mortgage loans that you may require, be it second mortgages, home equity loans, Home Renovations Lines of Credit (HELOC), bridge loans and consolidating loans. With access to a well established network of private lenders across the Province we will address your financing concerns and connect you with a private lender to negotiate mortgage loans to cover short term financial needs while you work to restore your credit. Learn more about Private Lenders in Ontario
Home Equity Loans in Ontario
You have heard it before. Tap into the equity built up on your home. Why not try to consolidate your existing multiple debt payments and roll them into one monthly, easy to manage debt payment. By applying for a home equity loan, you are not only taking advantage of funds already built up in your property, but you can now look forward to one monthly payment with a lower interest rate than other high interest debt you may have including credit card payments.
Mortgage Broker Store can help you with any concerns you may have when applying for a home equity loan. We have vast experience in negotiating mortgage loans ranging from home equity loans to second mortgages, bridge loans and consolidation loans. With access to a vast network of private lenders across the Province of Ontario we will be able to connect you with a private lender to suit your needs and help you achieve financial peace of mind even if current credit issues have been a deterrent with other lending options. Learn more about obtaining a Home Equity Loan in Ontario
Bad Credit Mortgages in Ontario
Even if you are having current credit issues there are still lending options open to you. As an Ontario homeowner or borrower you may have been turned away by the big banks or credit unions based on your credit score. Private lenders can help bridge this financing gap by providing you with different secured mortgage loan options. We will base the criteria of these loan applications on factors beyond your current credit score. By accessing any additional assets you have, looking at all sources of monthly income and assessing the appraised value of your home private lenders can secure a mortgage loan to meet your short term financial goals.
Mortgage Broker Store can steer you in the right direction when applying for a bad credit mortgage. We have access to a broad range of private lending options, each with valuable experience and well established in the Province of Ontario. We will be able to address any questions you may have and work with you to solve your lending needs despite current credit issues. Learn more about how to obtain a Bad Credit Mortgage in Ontario
Debt Consolidation in Ontario
There is nothing worse than debt to provide ongoing worries. Multiple debt payments may give you sleepless nights. Ontario homeowners do have options to help navigate debt concerns. Rather than taking out another potential personal loan, look to utilizing existing equity built in your home to address ongoing financial issues. Even if your credit is damaged and the big banks may not be an option, there are many Ontario based private lenders that can work with you to take out a consolidation loan such as a home equity loan or Home Equity Line of Credit (HELOC). Don’t let credit issues dissuade you from taking the steps necessary to consolidate your multiple monthly debt payments into one monthly payment utilising funds that have built up on your property.
Mortgage Broker Store has access to a vast network of private lenders across the Province of Ontario that enables us to connect Ontario homeowners and borrowers with a private lender to address any credit issues while negotiating private mortgage loans. We will address any questions you may have and work with you to help you achieve your lending needs. Learn how to Consolidate Your Debt in Ontario
Stop Power of Sale in Ontario
If you have been late in mortgage payments and are currently in default of your mortgage loan, you may have found yourself in the midst of the process of Power of Sale on your home. Although there are legal issues to address, there are still steps that can be taken to possibly stop the Power of Sale going through on your home. Power of Sale still takes time and there are steps that your lender must follow in order to legally carry out a power of sale on your property. It is not too late to sit down with a private lender and take the necessary immediate steps to stop a power of sale going through on your home.
Mortgage Broker Store is here to help you in taking the steps to try to prevent a power of sale going through on your home. We have access to a broad network of private lenders across the Province of Ontario that are both experienced and well established. We will sit down with you, answer any question you may have while working with you to move forward on stopping a power of sale on your valued home. Learn more on how to Stop Power of Sale in Ontario