3 Best Uses for Reverse Mortgages

Are you thinking about a reverse mortgage? Here are three of the best uses for one.

Debt Consolidation

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.

You can pre-apply for a reverse mortgage here at Smarter Loans and we will connect you with a provider in our network. Pre-apply for a reverse mortgage!

Covering Your Living Expenses

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.

Home Renovations

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.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.