Reverse mortgages can help you stay in your home after retirement

Benefit of reverse mortgage

The most recent statistics from 2022 indicate there are more than 1.9 million divorced people between the ages of 55 and 89 years old in Canada.

This phenomenon, commonly known as “grey divorce”, is defined as those over the age of 55 going through a divorce. For many of these individuals, staying in the home they love is a priority, but they may not have the funds on hand to finance a buyout.

If you lack the means to generate new wealth or face difficulties borrowing due to a lack of employment income, it can be tempting to dip into your retirement savings or investments to cover the cost of a home buyout. However, there may be another solution.

For those looking to finance the buyout of their marital home, a reverse mortgage may be the answer. A reverse mortgage can help you tap into the equity you’ve built in your home to buy out your spouse’s half of the home. With a reverse mortgage, you can access up to 55% of the value of your home and turn it into tax-free cash. What’s more, there are no monthly mortgage payments.

There are many other ways a reverse mortgage can be used such as:

• Health care: 91% of Canadians say they want to remain in their own homes for as long as possible after retirement. If you are one of these Canadians, you can use a reverse mortgage to help you continue living in the comfort of your own home and community.

• Renovations/retrofitting: Many clients use the proceeds of the reverse mortgage for renovations and retrofitting.

• Income supplement: Like many other Canadians, you might fear that you cannot maintain the same standard of living once you retire due to a decreased income. However, with a reverse mortgage, you can get an increase in your cash flow with no monthly payments required and be financially secure to live out your retirement on your terms.

• Unplanned expenses: You may have the perfect retirement plan, which has been built to provide you with financial security. However, unplanned expenses are almost impossible to avoid, no matter how much planning you have done. Emergencies relating to damages to your home and unexpected health issues can always arise, the costs of which may not have been accounted for in your retirement plan. A reverse mortgage can help you by accessing the value of your home’s equity and giving you the tax-free cash, you need to be financially prepared for any unplanned expenses.

• Early inheritance: Many clients use a reverse mortgage funds to provide an early inheritance to their family. With the cash you receive from the reverse mortgage, you can help support your loved ones now and give them an early inheritance to help them with a down payment on a house.

• Debt consolidation: One of the most common use of funds of a reverse mortgage is for debt consolidation. You can use the tax-free funds you obtain from accessing your home’s equity to pay off all your debts and live a peaceful retired life.

Big life events like divorce or even retirement are challenging. Please don’t hesitate to contact me to learn more about how a reverse mortgage can make a difficult time a bit less challenging or to see if there are other options available for you. If you would like to chat please book a time here on my calendar calendly.com/april-dunn or email: [email protected]

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. For over two decades, she has been helping clients to arrange their financing to purchase a home, refinance, or renew their mortgages. Drawing from her extensive experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution, and as a Mortgage Broker, April has the necessary expertise to design a tailored mortgage plan with features and options that cater to each client's individual needs. April offers a complete range of residential and commercial mortgage financing services to clients throughout British Columbia and the rest of Canada through her affiliation with the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 1-888-561-2679.

Website: www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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