Lifestyle Mortgages, also known as reverse mortgages, aren’t always understood well. Canadian homeowners are often looking for ways to turn the equity in their home into income that can benefit their lifestyle. Here are some of the top questions homeowners may ask when considering a reverse mortgage, answered by Surrey mortgage broker, Rich Ulvild.
Fiction: A Lifestyle mortgage puts me at risk of losing my home.
Fact: “I hear this concern the most with my clients,” Ulvild says. “The truth of the matter on this concern is quite simple: The chances of the bank taking your home due to a lifestyle mortgage is extremely unlikely. As long as you stay up-to-date on your property taxes, home insurance and dutifully maintain your home, then you’ve upheld your side of the agreement.
“Even if something happened to the market – which statistically is very unlikely – the most you can take out in a lifestyle mortgage is 55 per cent of your home’s worth. That, and a variety of other failsafes, such as a No Negative Equity Guarantee are designed to ensure the safety and security of a lifestyle mortgage as a financial option for those who need them.”
Fiction: I’ll lose the equity in my house.
Fact: If we look at market trends, housing prices in Canada have continued to rise steadily. Even if you took out half of what your home is worth – the max amount allowed – your home’s worth would only need to increase by half the interest rate of the lifestyle mortgage for you to not lose any equity, Ulvild says.
Fiction: A lifestyle mortgage is a last-resort financial option.
Fact: “Nothing could be farther from the truth,” Ulvild says. “Thousands of Canadians are already using Lifestyle mortgages and what they really provide is a smart financial strategy.”
Since the funds are coming from the equity in your home, they’re tax free and will not affect your pensions or benefits. A reverse mortgage can help you preserve your other financial investments and therefore ensure all of your assets are working for you – including your home.
“Many misunderstandings come from our U.S. neighbours, whose reverse mortgages work very differently from ours in Canada,” Ulvild notes. “Here in Canada, we have many more regulations and safety nets in place to protect you and your home.”
For more information about this and all your other mortgage-related questions, call Rich Ulvild at 604-803-1456, email rich@mylendingexperts.ca or find additional information online here.
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