AGENT LICENSE ID
M08000691
BROKERAGE LICENSE ID
#10280
Brian Matthey
Broker/Owner
Office:
Phone:
Email:
Address:
775 Blackburn Mews West, Kingston, Ontario
BROWSE
PARTNERSThe Downsizing Dilemma for "Boomers" Part Two
1/3/2022
What is True and What is Not!
There are so many misconceptions about a REVERSE MORTGAGE, that are spread by people who know nothing about the product.
Let's start with what is true.Yes, it is more costly than a normal mortgage! If somebody qualifies with a normal mortgage with payments the rate today (Jan1/2022) is around 2.75% for a fixed mortgage for 5 years. A secured line of credit is around Prime 2.45+ plus .50% or 2.95%. A Reverse Mortgage for 5 years would be 5.64% and a floating rate mortgage could be as low as 4.64%. You do pay a rate premium for the advantage of having no payments and for also having way fewer qualification standards than a normal mortgage. Fact is, some people would not qualify for a normal mortgage today under the Government's strict qualification guidelines. The cost to process a normal mortgage would approximate $1500 to $2500, including legal fees, appraisal. The costs are normally built into the mortgage. A Reverse mortgage can cost $1795-$2495, depending on the product, plus the cost of an appraisal and independent legal advice and these costs are normally built into the mortgage. There, that is the only truth. Now let's talk about some of the things that are not true.
1)There are no payments! Sounds strange to anybody who has had a mortgage previously but the equity in your home pays for the interest costs.
2)Fact!-No one has lost their home due to a Reverse Mortgage in the 30 -year history of Reverse Mortgages in Canada
3)Fact!-You will see advertising saying you can get up to 55% of the value of your home. Reality-You get much less money from a Reverse Mortgage than you would in a normal mortgage. The average Reverse Mortgage would be somewhere between 35-40% of the value of your home depending on your age and the type of product you choose. That ensures the growth of the Reverse Mortgage will not exceed your home’s value and there is a “No Negative Equity Guarantee” built into every mortgage. I like that!
4)Fact -the Bank does not own your home. You maintain title and ownership. Your responsibility is to pay the property taxes, insurance and maintain the home.
5)Fact-if you die the Bank does not take your home. There is no change to the status of the reverse mortgage as long as the surviving spouse occupies the home.
These are the 5 "biggies" and maybe you have more questions. Feel free to call me at 613-561-2719 or email me at brian@mtgprof.com, if you do.
The Reverse Mortgage provides the best peace of mind of any other mortgage product in the market. Even though I will do my best to ensure you know what you are doing the lender will not let you proceed until you obtain independent legal advice to ensure you understand the process, costs, and the product.
I like that!
In Part Three,I will outline the 11 reasons why somebody would consider a Reverse Mortgage-You can access part three here:
