Reverse Mortgages in Toronto, Ontario

With a reverse mortgage, instead of the homeowner making payments to the lender, the lender makes payments to the homeowner. The homeowner gets to choose how to receive these payments (either as a lump sum payment, scheduled payments, or line of credit) and only pays interest on the proceeds received. The interest is rolled into the loan balance, so the homeowner doesn’t pay anything up front. The homeowner also keeps the title to the home. Over the loan’s life, the homeowner’s debt increases, and home equity decreases.

The home is the collateral for the reverse mortgage so when the homeowner moves or passes away, the proceeds from the home’s sale go to the lender to repay the reverse mortgage’s principal, interest, mortgage insurance and fees. Any sale proceeds beyond what was borrowed go to the homeowner (if he or she is still living) or the homeowner’s estate (if the homeowner has passed away). In some cases, the heirs may choose to pay off the mortgage so they can keep the home.

A reverse mortgage is the only way to access home equity without selling the home for seniors who don’t want the responsibility of making a monthly loan payment or who can’t qualify for a home equity loan or refinance because of limited cash flow or poor credit.

Once you’re 55 or older, a reverse mortgage can be a good way to get cash when your home equity is your biggest asset and you don’t have another way to get enough money to meet your basic living expenses. A reverse mortgage allows you to keep living in your home as long as you keep up with property taxes, maintenance and insurance and don’t need to move into a nursing home or assisted living facility for more than a year.

A HELOC allows you to borrow against your credit line at a later date without having to apply for a new loan. In that way, it’s a nice emergency source of funds. Interest is paid only on the balance drawn from the credit line (like a credit card).