Are you thinking about a reverse mortgage? Here are three of the best uses for one.
Smarter Loans Inc. is not a lender. Smarter.loans is an independent comparison website that provides information on lending and financial companies in Canada. We work hard to give you the information you need to make smarter decisions about a financial company or product that you might be considering. We may receive compensation from companies that we work with for placement of their products or services on our site. While compensation arrangements may affect the order, position or placement of products & companies listed on our website, it does not influence our evaluation of those products. Please do not interpret the order in which products appear on Smarter Loans as an endorsement or recommendation from us. Our website does not feature every loan provider or financial product available in Canada. We try our best to bring you up-to-date, educational information to help you decide the best solution for your individual situation. The information and tools that we provide are free to you and should merely be used as guidance. You should always review the terms, fees, and conditions for any loan or financial product that you are considering.
Are you thinking about a reverse mortgage? Here are three of the best uses for one.
If you have high interest debt, using a reverse mortgage to pay it off can be a great way to improve your financial situation.
If you have accumulated a lot of credit card debt, not only can it cost you a lot in interest, but it can also cripple your cashflow as well. The interest-only payments can prove costly on unsecured lines of credit, if you’ve accumulated a lot of debt. The minimum payments on credit cards can be a lot more manageable, however, that debt will need to be paid eventually. If you’re only ever paying the minimum, it will end up costing you a lot in the long run.
If you have a home, why not tap into some of that equity to pay off your high interest debt? Reverse mortgages rates are almost always lower, making it a good option to consider.
A common problem faced by seniors these days is being “house rich, cash poor.” It is what it sounds like. It’s when you have a lot of equity in your house, but no way to access it. You could take out a HELOC, but you need to have sufficient income to apply for one of those. If you are on a fixed income, you may not have the income to qualify for a HELOC.
The unfortunate thing is that you can’t just sell a spare bedroom to get some extra cash. You have to either sell or not sell your entire house. And if you decide to sell your house, there are transactional costs. We’re talking about realtor commission, real estate lawyer fees, etc. There has to be a better way and thankfully there is: a reverse mortgage.
With a reverse mortgage, you can tap into the equity in your house without selling it. If your government benefits aren’t enough to survive, you could use the substantially amount of equity in your home to live out your retirement years without needing to worry about money. It makes a lot of sense for a lot of seniors.
Is your home in desperate need of repair? Sadly, many seniors let their homes fall apart and get in a sad state because they simply don’t have the savings to pay to have them repaired. Not only is this inconvenient for you living in the home, but it can also mean problems selling your house later on. If your home is in a teardown state, it’s likely to sell for a lot less than if it was in good shape.
Sometimes you need to renovate your home. For example, if your home has stairs and you’re having mobility issues, you might need to add an elevator or move a bedroom to the main floor.
Either way, if you have a lot of untapped equity, a reverse mortgage can be a great way to pay for those renovations. You can get the work done and live out your golden years in a house that’s suitable for you, rather than risking life and limb each time you struggle to climb up the stairs.
