Reverse Mortgage Loans Blog

Canadian Home Income Plan

The housing marketing in Toronto has increased considerably as new housing assessments show that the property originally purchased is now worth considerably more than this purchase price. However, with houses consisting more, the property tax to be paid on these houses has increased as well.

Yet according to the Canadian Home Income Plan, many people especially seniors can use the equity in their homes to help pay impending bills.

It is being recommended by Patricia Lovett-Reid, Senior VP of TD Waterhouse as a “legitimate funding strategy for people 60 and above who want to stay in their home”.

Usually many people choose either a 6 month or 1-3 year term, with 6.95% interest on the 6 month term, or 8.25% interest on the 3 year term. Based on this strategy, homeowners are able to receive $20,000-$50,000 tax free, and this amount is paid back when the house is sold or if you die.

Advantages and Disadvantages Of A Reverse Mortgage

Anyone interested in a reverse home mortgage should know that it is something to consider only after carefully reviewing it advantages and disadvantages.

Moreover, a revere mortgage allows people to borrow against their real estate property. Their home equity is a great way to receive a loan from a bank. The amount of the loan is paid on a monthly basis until the full mortgage borrowed is released.

If the property is sold, the bank’s loan is due in full plus the interest and any closing costs associated with the reverse mortgage.

A reverse mortgage has its advantages that it allows people who do not have money for everyday essentials but own a house, the ability to borrow money based on their property.

However, it has a few disadvantages such that the upfront fees associated with it are high, almost 10% of the amount borrowed. As well, the “due on transfer” clause states that the loan must be paid immediately when ownership of the house changes. Therefore, if the person dies, the family house might have to be sold to repay the loan.

What is a Reverse Mortgage Home Loan?

A reverse mortgage is a tax free loan for seniors above the age of 62. Reverse mortgages allow you to convert some of the equity of your home into income without having to sell you house or take on additional expenses (like those associated with a second mortgage).

Typically you only have to pay back the loan when you sell the home, no longer live there as a primary residence, or when the last surviving borrower dies.

HECM reverse mortgage loans are federally insured, so if you outlive the value of your home or for some reason the value of your home drops sharply you can't be forced to give up your home.