6 Myths About Reverse Mortgages In Canada Busted
You must have come across at least one myth surrounding the term reverse mortgages. Here we have debunked the top 6 myths about reverse mortgages to help you get a clear understanding about this type of mortgage.
Source: Freepik
There are many myths and facts related to the term reverse mortgage. You have heard people say things like; it is a fraud, the bank will seize your home, do not do it unless you are in dire need. It is better to get these myths busted.
A reverse mortgage allows you to borrow money against your home equity without selling it. It is an essential financial option for many. So, for your help, we have busted some of the popular myths about reverse mortgages.
Myth 1: You must be 65 or older to qualify
Fact
To be eligible for a reverse mortgage, you must include all people on the home title when filling out the form. And all the people involved must be at least 55 years old.
Myth 2: The application process is too complex
Fact
Applying for a reverse mortgage is not too different from the traditional mortgage. Analyzing the needs, evaluating the application, and finally approving the mortgage are all done the same way as the standard mortgage application process.
Myth 3: Interest rates are too high
Fact
The interest rate on a reverse mortgage is higher than the ones on most other types of mortgages. But the reverse mortgage is risk-free and tax-free. As a result, they are, of course, at a higher interest rate. The interest rates are lower than many car and home loans and credit cards.
Myth 4: If I have poor credit, I will not qualify for a reverse mortgage in Canada
Fact
You do not need good credit to qualify for a reverse mortgage in Canada. You are not required to make payments on a Reverse Mortgage until you move or sell your home. It makes Reverse Mortgages beneficial to people on fixed incomes who cannot make regular repayments.
Myth 5: Bank will take the home
Fact
You and other individuals who have their name in the house title remain the owner. If you sell the property, the balance on the reverse mortgage from the sale proceeds goes to the lender. And you get to keep any profits that remain.
Myth 6: Face eviction if you miss payments
Fact
Suppose you do not make payments on a set schedule. You can live in your home for the rest of your life without having to make any payments. Home equity pays for the interest.
Want to renovate your house? Read ‘What is home improvement mortgage in Canada?’ to know more.
