There are many reasons to use a reverse mortgage to unlock some of the equity in your home. With some extra cash, you can combat inflation and stay on top of monthly bills. You can travel, and make the most of early retirement. You may want to pass some wealth to loved ones through a living inheritance, or renovate your home so it suits your current and future mobility needs.
“A reverse mortgage has no payments, and you don’t pay tax on the money you borrow, so it’s a great solution for people who need to preserve cash flow,” says Bloom Finance founder and CEO Ben McCabe.
The benefits seem obvious, but some Canadians still hesitate to take advantage — mostly because of a few myths that have developed over time.
“Some bad actors from the past offered products that looked similar, but often had strings attached. A modern reverse mortgage is much more flexible,” McCabe says.
How reverse mortgages work
- You still own your home. One misconception about reverse mortgages is that you no longer own your home, but that’s not the case. You can access up to 55 per cent of the value in your home, while retaining 100 per cent ownership!
- You’ll never owe more than your home’s value. Even though house prices are expected to continue rising, some people worry that if they take out a reverse mortgage they’ll end up owing more than their home is worth. That type of restriction is sometimes a concern with a Home Equity Line of Credit (HELOC) but with a reverse mortgage, even if house prices fall, you don’t have to worry. Thanks to the home equity guarantee, you and your family will never owe more than the fair market value of your home at the time you leave it.
- Less worry about taxes and interest rates. Payment is only required when you cease to occupy the home, so you don’t have to worry about regular principal or interest payments. And unlike selling investments from your retirement portfolio, which usually comes with a capital gains tax, reverse mortgage payments aren’t taxed.
Many British Columbians have already taken advantage of Bloom’s reverse mortgage. John in Nanaimo used a reverse mortgage to pay for home repairs and trips to Victoria for medical appointments. Beverly in Summerland used some of the funds from her reverse mortgage to help pay her grandchildren’s hockey fees. Len and his wife in Chilliwack used theirs to help fund adventures in their RV.
“The Bloom reverse mortgage means you’re not nickeling and diming yourself. You’re not stuck at home because you’re basically house poor,” Len says.
Ready to learn more? Call 1-866-882-5666, or request a free guide at welcome.bloomfin.ca.