Can You Get a Lump Sum with a Reverse Mortgage?
Reverse mortgages are a tool that Canadian homeowners who are age 55 and older can use to access the equity in their home. A reverse mortgage differs from other mortgage tools like second mortgages in that the homeowner does not need to pay back the loan until they either sell or move out of their home, or they pass away.
Can you get a lump sum of money with a reverse mortgage?
Yes, when you get a reverse mortgage you may choose to receive the cash as one lump sum of money. You may also however, choose to get smaller monthly payments so that the reverse mortgage can essentially act like an extra paycheck.
What are the reasons for getting a reverse mortgage?
Canadian homeowners choose to get reverse mortgages for a variety of reasons. Most people who get reverse mortgages are retirees. Since they are no longer working, they have limited options on how to get extra money when they need it.
They may need a lump sum of money to pay for home renovations, medical expenses or to go on the adventure they always dreamed about when they were younger. Some of these retirees may simply not be earning enough in retirement, and using a reverse mortgage is their best option to help them maintain a comfortable lifestyle.
The money they receive from a reverse mortgage may be just what is needed to help these seniors retain their dignity and help them avoid being a financial burden to their families.
Are there any drawbacks to getting a reverse mortgage?
Although you are not required to pay back a reverse mortgage for as long as you or your spouse are living in your home, the money comes due when the home is sold or when you both pass away. Over this time, the loan will have accumulated interest and paying back the loan can cut significantly into the estate and any inheritance you wish to leave behind.
For some, this is a significant concern and for others, it is a small price to pay so that they will not have to rely financially on their children while they are living.
Are you considering a reverse mortgage?
If you are considering a reverse mortgage, your first step should be to sit down with a mortgage professional who can help you determine whether this is the right product for you. Contact Matrix Mortgage Global today to set up an appointment.