The vast majority of Canadians want to age in place. However, four out of five seniors have some level of financial anxiety because their savings and pension income aren't sufficient to sustain a comfortable standard of living through retirement.
"There's no reason for Canadian homeowners aged 55-plus to feel financial anxiety when they're sitting on such significant wealth in home equity," says Ben McCabe, founder and CEO of Bloom Finance Company, a Canadian financial services company operating in B.C. and Ontario.
"A reverse mortgage is a great way to tap into that wealth to live well in retirement."
Bloom believes that unlocking home equity can and should be a simpler, friendlier process and that Canadians will increasingly view home equity release as a mainstream solution to support retirement.
Bloom Reverse Mortgages helps homeowners over the age of 55 find financial flexibility in retirement by unlocking some of their home equity.
Here are six myths and misconceptions about reverse mortgages:
Myth: reverse mortgages mean losing ownership of your home.
Fact: You still own your home with a reverse mortgage.
Reverse mortgages allow you to access the equity in your home without selling it. You retain full ownership of your home, and the lender does not take ownership.
Myth: you can end up owing more than your home is worth.
Fact: You can never owe more than the value of your home.
Industry practice requires lenders to offer reverse mortgages with a "no negative equity guarantee." This means you can never owe more than the fair market value of your home at the time it is sold.
Myth: reverse mortgages are only for people in financial trouble.
Fact: Reverse mortgages can be used for many reasons.
People use reverse mortgages to supplement retirement income, pay for home renovations, travel, or help family members financially. It's a personal choice that depends on individual financial circumstances.
Myth: you can't get a reverse mortgage if you have an existing mortgage.
Fact: You can get a reverse mortgage if you have an existing mortgage.
You can still get a reverse mortgage if you have an existing one. The reverse mortgage pays off the existing mortgage, and any remaining funds are available to you.
Myth: you have to make monthly mortgage payments with a reverse mortgage.
Fact: You do not have to make monthly mortgage payments with a reverse mortgage.
With a reverse mortgage, you receive a lump sum payment from the lender. You do not make monthly mortgage payments as you would with a traditional mortgage. The loan is paid back when the home is sold or when the last borrower dies or moves out of the home.
Myth: a reverse mortgage means you’ll have nothing to leave to your beneficiaries
Fact: Your home will still hold value for your beneficiaries.
While the mortgage balance will grow with time, often, the growth in home prices can offset that. Nearly all reverse mortgage customers have equity in their homes at the end of the day, and for many, it's greater than 50% of their home value.
"It's becoming clearer that accessing that home equity in some way is a prudent retirement planning decision," McCabe says.
To learn more about how a Bloom Reverse Mortgage can help you live a happier retirement, visit bloomfin.ca.
