Chances are you’ve been dreaming about this moment throughout your working life—BEING RETIRED and having the time and money to:
Most Canadian seniors have 80% of their assets tied up in their house. But accessing that equity can be difficult. Most banks won’t give you a mortgage because you don’t have enough income to make monthly payments.
So what are your options?
Well, you could downsize and sell your house. But isn’t that where you always dreamed you’d spend your retirement? Leaving the home where you raised your family, put down roots and made lifelong friends would be heart-breaking. Besides, selling and moving can be very expensive once you’ve paid real estate fees, moving expenses, legal fees, etc. There’s got to be a better solution!You don’t have to leave the family home!
There IS a better solution, and for many seniors it’s a reverse mortgage.
A REVERSE MORTGAGE is a specialized financial product for people 60 and over who own their own home. It lets you stay in your home while benefiting from the value you’ve built up in that property over the years. Compared to a regular mortgage, a reverse mortgage can offer substantial monthly cash savings, so you have all the income you need to live the retirement of your dreams.
As your local mortgage advisor, I can introduce you to all the benefits of a reverse mortgage. However, since I’m not tied to any one lender or type of product, before recommending a reverse mortgage, I’ll do a thorough analysis of your situation, needs and goals. Only then will I make an unbiased recommendation about which product is right for you. In most cases, that will be a reverse mortgage. But I also have access to innovative lines-of-credit and other home lending products which may fit your specific needs even better.
Let’s see if you’re one of the vast majority of Canadian seniors who can benefit from a reverse mortgage. Here are the 7 facts you need to know:
FACT #1: Regular mortgages require you to pay a lender. A reverse mortgage pays you!
If you and your spouse are 60 or older and you own your home as your principal residence, you may be eligible to receive up to 40% of your home’s current appraised value in cash. The specific amount you’ll receive is based on your age, your spouse’s age, the location and type of home you have, and your home’s current appraised value. No matter how much you receive, you never have to make monthly principal or interest payments (until you move), so you get the money you need without reducing your cash flow!
FACT #2: There are no income, asset, employment or credit requirements.
Since the amount you receive is secured against your home, qualifying is easy and hassle-free—even if you’re living on a very limited retirement income.
FACT #3: You can receive the money whichever way works best for your lifestyle.
With a reverse mortgage, you can choose a single lump sum payment or ongoing monthly, quarterly, semi-annual or annual income. You can even choose a lump sum to begin with, followed by ongoing advances over time.
FACT #4: A reverse mortgage can be used to clear up all your remaining debts.
Maybe you still have a mortgage remaining on your house and the payments are cutting into your lifestyle. Maybe you have monthly credit card bills piling up. A reverse mortgage can be the ideal solution. In most cases, you can use the funds to eliminate mortgage payments and credit card debts, and still have enough left over so you can enjoy life more and not have to worry about money.
FACT #5: Your income taxes and pension are unaffected.
As a retired person, one of your major concerns is how much you’ll be paying in taxes each year, since that can really affect your cash flow. Fortunately, the money you receive from a reverse mortgage isn’t considered income—even if it’s invested in an account or annuity with monthly withdrawals. This is because the home equity you’re accessing has already been taxed, since you purchased your home with after-tax dollars. Not only don’t you have to pay taxes on your reverse mortgage proceeds, they won’t bump you up into the next tax bracket. And since they’re not considered income, they won’t affect your Old Age Security (OAS) or Guaranteed Income Supplement (GIS) payments.
FACT #6: It’s ALWAYS your home!
You’ll never be asked to move or sell your home to repay your reverse mortgage, as long as you maintain the property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees. Your equity and estate is fully protected since the reverse mortgage amount can never exceed your home value. Sure, the equity in your home will decrease over the years as you receive payments, but your home’s value will likely increase even more quickly over the same period.
Generally, 99% of homeowners have money left over when their reverse mortgage is finally repaid (when you move or die). On average, the amount left over is 50% of the value of the home when it’s sold.
FACT #7: The interest on your reverse mortgage can sometimes be tax deductible.
If you use the money you receive to make non-registered investments such as GICs and mutual funds, the interest costs on your reverse mortgage can be written off at tax time. This can help offset the taxes you owe on your income, RRIF or RRSP withdrawals. If you’re considering this strategy, I can refer you to a trusted local financial planner.
There you have it—7 compelling reasons why a reverse mortgage may be the right solution for you! Not only will you have all the cash flow and security you need to accomplish your retirement dreams, you’ll continue to live in your own home and own it with much of the equity left intact.
The next step is discussing your specific needs and goals. If you’re interested in exploring the benefits of a reverse mortgage, I invite you to contact me today at:
As I said, the vast majority of seniors can benefit from a reverse mortgage. However, I wouldn’t be doing my job as an independent mortgage advisor if I didn’t also have other solutions to offer you. Once we’ve discussed your needs and goals, I’ll be able to make a fully informed, entirely unbiased recommendation that’s in your best interest.
For instance, if you simply want money for a vacation or new car, a reverse mortgage can be a very expensive way to get it. If you want the money for investments, keep in mind that the cost of the reverse mortgage may be more than you can safely earn. In cases like these, I may be able to tailor a home equity loan or line of credit to meet your needs in a much more cost-effective manner. The only way to know for sure is to talk to me today!
Don’t spend another day wondering where your next mortgage and credit card payments are coming from and worrying about your future. Retirement was meant to be relaxing and worry-free! Please allow me to help put your mind at ease by introducing you to the benefits of a reverse mortgage or other innovative home financing solution. I look forward to hearing from you soon.
There are many reasons why you should consider jumping into the real estate market and buying a home. Below is a list of 5 reasons to buy a house rather than rent.
1) House prices tend to rise over time, so a house is one of the best investments you can make. Home prices have risen three to six percent a year for the last 20 years and the trend is likely to continue. So if you buy a home now, you’ve put your capital in a safe investment where it is likely to grow.
2) You’ll pay less tax. You can deduct the interest you pay on your mortgage from your total income. The value in this tax break depends on factors like your personal tax bracket, the size of your mortgage, the rate of interest you pay on it and how long you’ve held the mortgage. As a rule, the newer the mortgage, the greater the amount of interest you pay each month and the bigger the tax break. Therefore, recent buyers with young mortgages tend to get the greater benefit.
3) You’ll be buying a piece of real property rather than putting money into your landlord’s pocket every month. The real cost of renting is higher than the monthly payment. There is also an opportunity cost equal to the amount you would gain by using the money to purchase a home instead. Even if the house you purchased did not appreciate in price, you would be able to sell it and recoup some of the money you put into it.
4) Interest rates are still very low historically. This makes it inexpensive to have a mortgage. The lower the interest rate, the less you actually pay for you house and the faster you pay the mortgage off.
5) You’ll be able to use the equity in your home for low cost loans for other purposes. You can access the paid up equity you accumulate in your home in the form of a home equity loan home equity line of credit. Because they are secured, home equity loans and lines of credit generally carry a lower interest rate than other types of consumer loans, such as auto loans. The interest on them is generally tax deductible, as well.
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Here are 8 steps to help you purchase your next real estate investment in Ontario.
1) Get Pre-Approved
Speak with a mortgage agent to discuss your financing options. Contact me today and let me help you get approved.
2) Connect with a Real Estate Agent
A great agent can help you find the perfect property within your budget. Look for an agent that has experience working with real estate investors. Seek out Toronto real estate investors and ask for a referral to the best Toronto agent.
3) Define What You Are Looking For
Do your homework and define exactly the kind of property you want to pursue and discuss your options with your agent. Determine the property type, maximum purchase price, desired return on investment and other details.
4) Start Looking
Get out there and start looking at properties. To save time, use your criteria from #3 above to only physically walk through properties that meet your guidelines
5) Do The Math
Understand exactly how much cash flow you'll get from your investment. Be conservative in your estimates and include expense allotment for vacancies, repairs, utilities, reserves, taxes, insurance and property management.
6) Make an Offer
When you find a good potential property, use your real estate agent to make an offer. Include your pre-approval letter from step #1 to strengthen your position. Negotiate with the seller - but whatever you do - don't overpay.
7) Do your Due Diligence
Make sure the property is all that it should be, both physically and financially.
8) Close on the Property
Sign the paperwork that has prepared by the title company, bring a certified cheque to closing and get the keys to your new property!
The latest hot topic in Toronto as been how to cool down the current real estate market. The soaring prices have affected young people the most, both renters and future first-time home buyers. Thankfully, the Ontario government has introduced two new laws which will help cool down the Toronto housing market. Checkout this article for more details:
Hi, I'm Ian. I am a Toronto-based mortgage agent who helps people get approved for the mortgage they need, with maximum options and at the best rate possible.
Call me today at (416)254-8131 to get answers to your questions about mortgages and current rates.