Reverse Mortgages may be a great alternative
If you’re a recent empty-nester or retiree considering downsizing, you may want to consider another option: reverse mortgage solutions. A CHIP reverse mortgage is a loan taken out against the current value of your home.
Reverse mortgages are gaining popularity in Canada as the workforce ages and home values increase.
While the solution is not for everyone, read more to see if a reverse mortgage is right for you
Should You Downsize
People downsize once they retire for three primary reasons: Less house to upkeep, unable to pay continue paying mortgage, and because they need additional cash on hand.
If you’re not looking to move to be near family or friends, downsizing may not be your best option.
Buying or renting a smaller property can cost you more than staying in your current home.
Downsizing has a lot of hidden costs. When selling your home, you’ll have to pay closing costs, realtor fees and legal fees.
You’ll have to pay those same fees plus a few additional costs when purchasing a new home:
Land transfer tax – these taxes vary by province but can range between .5-1% of the home’s value
Municipal land tax – some municipalities, like Toronto, charge a land tax in addition to the land transfer fee charged by the province
Title insurance and legal fees – typically averages about $1500
Moving costs – these will depend on the size of the house you are downsizing from, but a safe estimate is $2000
Property tax adjustment – dependent on when the seller paid it – but could be an additional cost
HOA fees – if you’re moving into a condo or retirement community, there are often monthly HOA fees required
When you add up all of the additional taxes, fees, and costs, they often leave the homeowner with far less cash than they had originally anticipated.
Benefits of Reverse Mortgage Solutions
If you’re looking to increase your cash on hand, a CHIP reverse mortgage may be the perfect solution.
A CHIP reverse mortgage is a loan secured by your home. In a reverse mortgage, there are no mortgage payments made while you live in the house.
Aside from maintaining the home and paying property tax and insurance premiums, homeowners do not need to make any principal or interest payments while they live in the home.
This allows the homeowner to free up cash while remaining in a home that they love.
Your age and property details will determine the amount of cash you can take out of your reverse mortgage.
To qualify, you need to be 55 years of age or older and own your home. With a reverse mortgage solution, you’re eligible to access up to 55% of the value of your home.
Contact Us About Reverse Mortgage Solutions
If you’re interested in pursuing a reverse mortgage, find out in 30 seconds how you can unlock the value of your home with a Free estimate.