Mortgage Blog

All About Reverse Mortgage 

In times of economic uncertainty, most homeowners are looking find ways to tap into equity in their home. There are many options available in the market like Second Mortgage, HELOC (Home equity line of Credit), Reverse Mortgage and borrowing prepaid amount. All of the options are for homeowners to access funds through their equity. All of them have their pros and cons. Two of them are the most important, which are HELOC and Reverse Mortgage.  

Reverse Mortgage: -  

Reverse Mortgage is a home loan for homeowners who are 55 or older than 55. Compared to traditional mortgages, Reverse Mortgage can allow their home equity to be turned into cash without selling or making any monthly payment. The reverse mortgage will be paid after selling your home, permanent move out or passes away.  

Qualification: -  

Reverse mortgage is available for those homeowners who are 55 or older than 55 and bought their home outright or have notable home equity.  

Payment and Repayment structure: -  

In Reverse Mortgage, you will receive money from the lender as monthly payment and lump sum. You don't have to pay any monthly fees if you live in a house. For the repayment, reverse mortgage will be repaid when you move out permanently, passes away or sell house.  

Interest rate: -  

Interest rate usually higher than traditional mortgage and it can be fixed or variable.  

Equity needed for Reverse Mortgage: -  

Generally, Homeowners must have notable equity to qualify for Reverse Mortgage. Equity needed for reverse mortgage depends on several factors like homeowner’s age, appraisal for the property. There are no specific equity requirements set by the government.  

Difference between Reverse mortgage and HELOC 

In reverse Mortgage, homeowners who are 55 aged or older than 55 will receive payments from lender without making any types of payment to lender. Repayment of the loan will be after you sell the home, permanently move out and passes away. In HELOC, Homeowners will make monthly payment during loan term and then repay to lenders with interest payment. Reverse mortgage has a higher interest rate compared to traditional mortgage. You can read more about HELOC in our blog. 

If you are still confused, then you can contact Sarbjit for more information or visit our website Centum United Mortgage  

If you are looking for pre-construction home or condo then check out our latest projects on our website Own Ontario Home.