Reverse Mortgages
Reverse Mortgages London Ontario and Surrounding Area – Free, No Obligation In-Home Consultations – I Come to You! Call or Text Mark Mitchell – 519-860-2102.
Reverse Mortgages
Reverse Mortgage London Ontario
As more and more baby boomers come of retirement age, and CPP not providing sufficient income to seniors and retirees, many are looking to Reverse Mortgages to help supplement their income. According to Global News, inquiries into Reverse Mortgages more than doubled between 2016 and 2017.
Given the increase in the popularity of Reverse Mortgages, it is important to understand their pros and cons, risks and rewards.
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Your Home stays in Your Name.
As long as Your Home remains your primary residence no monthly payments are required.
Receive a Lump Sum, Monthly Payments, or a Combination of the Two – You maintain control!
Reverse Mortgage Uses
Pay Off Credit Cards
Gifted Down Payment
Early Inheritance
Gift to Family Member
Home Renovations
Increased Cash Flow
Travel
Reverse Mortgages – The Basics
In a traditional mortgage you make a pre-determined payment at pre-set intervals until the mortgage has come to term. However, in a Reverse Mortgage you decide how much you will take out (up to 55 of your home’s value), and how much of that amount will be distributed to yourself over a set period of time.
Will the Bank Take My Home?
NO
One of the most common myths about reverse mortgages is that the home goes into the bank’s name. This is simply not the case.
Your Home stays in Your Name, and you Continue Living in Your Home!
Provided Property Taxes and Home Insurance are kept up to date, and you are living in the home and the home does not fall into disrepair, the lender will never ask you to sell your home and will never take your home.
What if I Run out of Money Before I Sell my Home?
According to the data collected, 99% of those who use a Reverse Mortgage have Equity left in their home by the time of sale.
Lets take an example in London Ontario.
The following example is based off a very conservative estimation of 4 percent home appreciation. In reality home prices have gone up by roughly 10 percent in the past few years.
For estimation sake though, lets assume this appreciate is not normal (although myself and many others suspect it is), and use a 4 percent appreciation.
The table below represents a couple who has taken out $100,000 out of their $300,000 home in a Reverse Mortgage.
At the end of 10 years there is still more equity left in the home than there was when the mortgage was initially taken out.
| Year | Mortgage Amount | Interest Rate | Accrued Annual Interest | Estimated End of Year Mortgage Balance | Estimated Future Home Value (4 Percent Appreciation) | Estimated Remaining Home Equity |
|---|---|---|---|---|---|---|
| 0 | $100,000 | 6.75% | $- | $100,000 | $300,000 | $200,000 |
| 1 | 6.75% | $6,864 | $106,864 | $309,000 | $202,136 | |
| 2 | 6.75% | $7,335 | $114,199 | $318,270 | $204,071 | |
| 3 | 6.75% | $7,839 | $122,038 | $327,818 | $205,781 | |
| 4 | 6.75% | $8,377 | $130,415 | $337,653 | $207,238 | |
| 5 | 6.75% | $8,952 | $139,367 | $347,782 | $208,416 | |
| 6 | 6.75% | $9,566 | $148,933 | $358,216 | $209,283 | |
| 7 | 6.75% | $10,223 | $159,156 | $368,962 | $209,807 | |
| 8 | 6.75% | $10,924 | $170,080 | $380,031 | $209,952 | |
| 9 | 6.75% | $11,674 | $181,754 | $391,432 | $209,678 | |
| 10 | 6.75% | $12,475 | $194,229 | $403,175 | $208,946 |
This is a very conservative estimate of how much equity would be left in the home after 10 years. While the above table uses a 4% Estimated Home Appreciation, homes in London Ontario have actually risen by a substantially higher amount in the past 5 years. In 2013 the average home value in London was $247,000 – As of 2018 it is $353,000 – a 70 Percent Increase in 5 years!
Again, while the London Ontario Housing Market might be in a bubble, a 4% percent estimate is ultra-conservative nonetheless.
How Does a Reverse Mortgage Differ from a Home Equity Line of Credit?
While both Reverse Mortgages and Home Equity Lines of Credit enable you to access your home equity, there are important differences:
Amount of Money Distributed
Reverse Mortgages set out a pre-defined amount of money you will receive each month, whereas Home Equity Lines of Credit enable you to access a pre-set amount of funds whenever you want.
Amount of Money Available
Reverse Mortgages enable you to access up to 55 percent of your Home’s Value, while Home Equity Lines of Credit allow you to access up to 80 Percent.
Qualifying Standards
It is much easier to qualify for a Reverse Mortgage (with the basic requirement be that you are over the age of 55) than it is to qualify for a Home Equity Line of Credit.
Price
Reverse Mortgages are generally more expensive than Home Equity Lines of Credit.
Reverse Mortgage Example
So is a Reverse Mortgage Right for You?
If you are thinking about a Reverse Mortgage or a Home Equity Line of Credit then please do contact me. You can complete the following form, or Call or Text me at 519-860-2102.
