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Whether seeking money to pay for medical treatment, finance a
home improvement, buy long-term care insurance, or
supplement their income, many older Canadians
are turning to a Canadian reverse mortgage. They
allow older consumers to convert the equity in their homes
to cash while retaining ownership of their property.
With a "regular" mortgage, you make monthly
payments to the lender. But with Canadian reverse
mortgages, you receive money from the lender and generally
do not have to repay it for as long as you live in your
home. In return, the lender holds some — if not most or
all — of your home's equity.
Introduced in the late 1980s, Canada reverse mortgages
can help homeowners who are
"house-rich-but-cash-poor" remain in their homes
and still meet their financial obligations. The proceeds
of the loan are tax-free, there are no minimum income
requirements, and for most reverse mortgages, the
money can be used for any purpose.
If you decide to consider a
reverse mortgage in Canada, shop around and compare terms. Look at
the:
1. Annual percentage rate (APR), which is the yearly cost
of credit.
2. Type of interest rate. Some Canadian reverse mortgage
plans provide for fixed rate interest; others involve
adjustable rates that change over the loan term based on
market conditions.
3. Number of points (fees paid to the lender for the loan)
and other closing costs. Some Canadian reverse mortgage
lenders may charge steep costs, which your lender may
offer to finance. However, if you agree to this, you'll
take out fewer proceeds from the loan or you'll borrow an
extra amount, which will be added to your loan balance and
you'll owe more interest at the end of the loan.
4. Total amount loan cost (TALC) rates. The TALC rate is
the projected annual average cost of a Canadian reverse
mortgage, including all itemized costs. It shows what the
single all-inclusive interest rate would be if the lender
could charge only interest and no fees or other costs.
5. Canadian reverse mortgage payment terms, including
acceleration clauses. They state when the lender can
declare the entire loan due immediately.
To find the
Canadian
reverse mortgage lender with the lowest costs, click
here.
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mortgage broker, Canada
mortgage calculator and Canadian
mortgage rate.
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