Given the many increases to the interest rates over the past year, it’s a no wonder people are worried about their mortgage renewal. This has affected every single variable rate mortgage or line of credit borrower in real time but only affects fixed rate mortgage holders at renewal. The one segment of the population most at risk for not being able to afford their mortgage at renewal are Seniors.
According to a Royal LePage Survey, only 64% of Seniors are mortgage free. Seniors are more affected by higher interest rates due to their limited income. So, what would I recommend as the best option for Seniors to manage their mortgage so they can live comfortably and stress-free?
It’s simple - a REVERSE MORTGAGE. This often-misunderstood mortgage is a lifeline for seniors who owe money on their homes and are limited in income.
One of the primary benefits of a reverse mortgage is that there are no regular principal or interest payments required. Interest is added to the balance, and the balance is paid when the homeowner ceases to live in the home. The loan balance grows over time but so does the home value. Lenders offer a “home equity guarantee” that guarantees that homeowners will never owe more than the value of the loan. And the proceeds are tax-free (subject to the same rules as an owner-occupied home sale).
Perhaps one of main misconceptions is that borrowers no longer retain home ownership. This is NOT TRUE. Home ownership remains in the hands of the homeowner (and their family).
The demand for reverse mortgages is growing as people realize the value of their home equity to help them fund their retirement dreams, at affordable and competitive rates. Life is expensive and Seniors don’t have to struggle to make all their payments and live comfortably.
If you want to discuss the pros and cons of a reverse mortgage or renewing your current mortgage, I am happy to schedule a call!
