How Does a Reverse Mortgage Get Paid Back?
In the right circumstances, a reverse mortgage can be a good option for Canadian seniors who are looking to supplement their income or who need a large lump sum of cash for an unexpected emergency such as a medical expense. One of the advantages of getting a reverse mortgage as opposed to something like a credit card loan is that you are under no obligation to make payments on the reverse mortgage provided that you or your spouse is still living in your home.
But like all mortgages, reverse mortgages do need to be paid back eventually. And this can happen in a few different ways.
Payments on a Reverse Mortgage
If you choose, you may make payments on a reverse mortgage. This will lessen the amount of interest paid by you (or your estate) over time. It is generally not recommended that you pay off the reverse mortgage before the end of your term however as this can result in some stiff financial penalties.
Selling Your Home
As mentioned, you can have a reverse mortgage and not have to make payments on it for as long as you or your spouse is living in your home. If you move however, are travelling for 12 consecutive months or more, or die the amount on the reverse mortgage will come due.
The most common way for families to repay reverse mortgages is through the sale of the home.
Is a Reverse Mortgage Right for You?
A reverse mortgage is one way to leverage the equity in your home to get the cash you need, but it is important to remember that interest rates are high and it can take a significant bite out of any estate that you might wish to leave to your family. On the other hand, if you would like to access a significant portion of your home’s equity without having to move, a reverse mortgage may be the right option for you.
Contact Matrix Mortgage Global Today
If you are considering a reverse mortgage or other ways to access the equity in your home, then contact the team at Matrix Mortgage Global today. We can walk you through the pros and cons of reverse mortgages and help you determine whether this is the right mortgage solution for you.