Reverse Mortgages Hamilton

According to recent research, 79% of Canadians over the age of 65 own their own home, and rapidly increasing property prices mean that many of these homeowners have the option to access the equity built up in their home, without having to sell it, via a reverse mortgage.

This can be a valuable way to access cash, so let’s take a look at exactly how reverse mortgages work. So here’s everything you need to know if you’re hoping to benefit from the equity in your home, and the top reverse mortgage providers in Hamilton that can help. 

Frequently Asked Questions About Reverse Mortgages in Hamilton

  1. What Is a Reverse Mortgage?
  2. Who Can Get a Reverse Mortgage in Hamilton?
  3. Where Can I Get a Reverse Mortgage in Hamilton?
  4. How Do Reverse Mortgages Work in Hamilton?
  5. Alternatives to Reverse Mortgages in Hamilton
  6. Reverse Mortgage Misconceptions
  7. Hamilton’s Property Market
  8. Frequently Asked Questions About Reverse Mortgages in Hamilton

What Is a Reverse Mortgage?

A reverse mortgage is a form of loan secured against your property, that releases the equity you have built up in your home in the form of cash. But as opposed to a normal mortgage, a reverse mortgage lasts the duration of your life, not a set term, and there are no repayments, for principal or interest. You do not pay anything for the loan until it terminates, at which point the loan must be fully repaid. Because of this, it acts exactly reverse to a standard mortgage – accruing value over time, instead of growing smaller.

Who Can Get a Reverse Mortgage in Hamilton?

Eligibility for a reverse mortgage is simple:

  • You must be aged 55 or over (if another person is listed on the property title, they must also meet this age requirement) AND
  • You must own your own home in Hamilton, which is your primary residence

If you meet these basic requirements, you are technically eligible for a reverse mortgage.
However, as with other types of mortgage, financial factors will be taken into account to see whether your chosen lender wishes to lend to you. These factors include:

  • Your age
  • Your home’s location
  • Your home’s condition
  • The amount of equity you have in the property
  • The type of property (e.g. condo, detached home, etc.)
  • The home’s appraised value

Where Can I Get a Reverse Mortgage in Hamilton?

At the moment, there are only two reverse mortgage providers across all of Canada:

1. Bloom Finance Company

  • Modern finance company with a mission to provide the simplest way for 55+ Canadians to unlock the wealth they’ve built
  • Easy online application and process
  • Operates in Ontario
  • Find out how much you are eligible for here

2. HomeEquity Bank (CHIP)

  • Available throughout Canada
  • Most widely used reverse mortgage provider
  • Private corporation active since 1986
  • Requires the home in question to be valued at more than $150,000

3. Equitable Bank

  • One of Canada’s ten largest banks
  • Reverse mortgages only available in select major urban areas
  • Requires the home in question to be worth more than $250,000
  • Minimum borrowing amount of $25,000

How Do Reverse Mortgages Work in Hamilton?

Getting a Reverse Mortgage

Getting a reverse mortgage is fairly easy:

  • Check you are eligible for one (see above)
  • Pay off any outstanding debts against the home (including HELOCs and other mortgages)
  • Pick a lender, and apply for your reverse mortgage
  • Complete all of the required paperwork (which includes documentation regarding the property you are mortgaging and your personal finances)
  • If you are approved, you can choose to take your mortgage funds either as a single lump sum, or split between a small upfront payment and monthly payments.

Keeping a Reverse Mortgage

Once you have a reverse mortgage on your home, there are some basic rules you must follow to stay in line with the loan’s stipulations. These are:

  • Live the house as your primary residence
  • Pay all applicable property taxes
  • Maintain insurance on the home
  • Keep the home in a good state of repair
  • Avoid using the funds from the reverse mortgage for illegal activities

If you fail to meet any of these conditions, you will default on the loan.

Closing a Reverse Mortgage

There are a couple of ways to close a reverse mortgage:

  • When the homeowner(s) die
  • When the homeowner(s) sell the home
  • When the homeowner(s) choose to repay the loan, but remain in the home
  • When the homeowner(s) vacate the property (e.g. to go into long term care)

The amount of time you, or your estate, have to repay the loan varies by lender and circumstance.

Alternatives to Reverse Mortgages in Hamilton

Not everyone is eligible for, or wants to get, a reverse mortgage, and fortunately there are some other options available to help homeowners benefit from the equity in their homes:

  • HELOCs
  • Cash out refinancing
  • Traditional home equity loans

Reverse Mortgage Misconceptions

There are quite a few misconceptions about reverse mortgages, which often make them seem less preferable to other financing options. Some of these misconceptions include:

  • If you get a reverse mortgage, you no longer own your home.
  • If you get a reverse mortgage, your children will not inherit your home.
  • Reverse mortgages are much more expensive than other types of mortgage.
  • If you don’t make your reverse mortgage payments, you’ll be evicted.
  • You have to be old to get a reverse mortgage.

Hamilton’s Property Market

Given the specifics of reverse mortgages, it’s worth knowing a little about Hamilton’s property market and its typical homeowner:

  • Average property price in Hamilton is $796,611. This increases to $874,925 for detached homes
  • Home ownership rates in Hamilton have increased 3.7% in the last 15 years
  • The average age of new mortgage applicants in Hamilton is 37 years old
  • New mortgages in the Hamilton area average $143,000
  • 30% of Hamilton’s population is over the age of 55

Frequently Asked Questions About Reverse Mortgages in Hamilton

Where can I get a reverse mortgage in Hamilton?

There are only two reverse mortgage providers in Hamilton: HomeEquity Bank and Equitable Bank.

Who can get a reverse mortgage in Hamilton?

Anyone in Hamilton who is 55 years or older (about 30% of the population) and owns their own primary residence can get a reverse mortgage.

How much can I borrow with a reverse mortgage in Hamilton?

You can borrow up to 55% of your home’s value with a reverse mortgage. This averages $438,136 in Hamilton.

How much does a reverse mortgage cost in Hamilton?

Reverse mortgage interest rates start at about 3.5%, but do vary depending on the term of the loan and some other factors. As well as this, there will be mortgage origination fees and legal fees associated with the loan.

How can I save money on my Hamilton reverse mortgage?

Interest accrues on your loan as it is received – so opting for monthly payments means less interest over the life of the loan. This is one way you can make your reverse mortgage a little cheaper; another is by repaying the loan in partial payments over time.

What kind of home can I get a reverse mortgage on in Hamilton?

Reverse mortgages can be taken out on any privately owned home, as long as it meets the lender’s criteria and is the borrower’s primary residence. If the property has multiple owners, then all of the owners must meet the lender’s requirements.

Will a reverse mortgage affect my benefits?

No, reverse mortgages do not affect benefits, as income from a reverse mortgage is tax free.

If my spouse dies, what happens to our reverse mortgage?

If you own your home with your spouse, the reverse mortgage is maintained after they pass away. For the reverse mortgage to close, both spouses need to pass away or vacate the home.

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