Seniors may need extra financial support moving into their golden years. That’s where reverse mortgages come into play, having gained increasing popularity, especially in Toronto and the surrounding areas.
However, some may find themselves getting spooked with all the misinformation surrounding reverse mortgages practices. In this article, we’ll be clearing up five of the biggest misunderstandings that people have about reverse mortgages.
This way, you will be able to make well-informed financial decisions based on all the right facts.
Myth 1: Reverse Mortgage Interest Rates Are Outrageously High
In reality, reverse mortgage interest rates in Toronto can be similar to, or even lower than, traditional mortgage rates.
Reverse mortgage rates are affected by several factors, including the age of the borrower, the property’s value, and current interest rates.
Just know that these rates are typically variable, not fixed. However, don’t stress; this can work in your favour if and when rates go down in the future.
Myth 2: I Will Lose Ownership of My Property if I Choose a Reverse Mortgage
Many people worry about losing their homes if they take out a reverse mortgage. However, the reality is that those who choose a reverse mortgage in Toronto will keep full control of their property.
The lending company stakes a lien on the home, but this only needs to be repaid if the house is sold or the borrower moves away for good.
Myth 3: Reverse Mortgages Are Only Meant for Those in Financial Distress
Reverse mortgages aren’t just for struggling seniors. Any homeowner who is 55 or older can use them to tap into their home equity.
Through this approach, borrowers can enhance their retirement incomes, pay for home renovations, invest, and pursue other endeavours. For diverse financial goals, reverse mortgages can offer a steady, flexible solution.
Myth 4: A Reverse Mortgage Means I’ll Owe More Than My Home Is Worth, Burdening My Heirs With Debt
Reverse mortgages are considered to be non-recourse loans. This means that any debt beyond the house’s sale value doesn’t fall on the borrower’s estate.
The maximum loan is generally a percentage of the home’s appraisal, thus protecting borrowers and heirs from huge debts.
Myth 5: Reverse Mortgages Compromise Government Benefits Like Pensions and Healthcare
Proceeds from a reverse mortgage count as a loan advance, not income. This means that your government benefits, like pension and healthcare, will remain unaffected.
As well, you can consider a reverse mortgage without fretting about how any government assistance plans may be impacted.
Demystify Reverse Mortgages With Northwood Mortgage
At Northwood Mortgage, we want to clear up any misconceptions that you may have about reverse mortgages so that you can feel more informed about your financial options.
A reverse mortgage can be a big help in securing more financial comfort during your golden years, allowing you to use your home’s value to support your fiscal needs.
Contact us today for more information about our services or to gain more professional insight into Toronto’s reverse mortgage rates. We’d be happy to help support you in securing your financial future.
