Reverse mortgages are often misunderstood

Confusion about reverse mortgages can lead to missed opportunities, especially for Canadians 55 and older who are “house rich” but looking for more financial flexibility in retirement. If you’re hoping to use your home equity to support your retirement nest egg, don’t ignore the reverse mortgage option.

Watch the video: “Reverse Mortgage Myths That Cost You Money”👇

In 90 seconds, I break down the 3 biggest misconceptions about reverse mortgages, and why one of them might be costing you thousands.

Here’s a deeper dive into what you need to know

Myth #1: You lose ownership of your home.

Truth: This is the most common reverse mortgage misconception. With a reverse mortgage in Canada, you stay on title. That means the home remains legally yours. You’re just borrowing against the home equity you’ve built over the years.

Myth #2: Your children won’t inherit anything.

Truth: Reverse mortgages are structured so that there’s still equity left after the loan is repaid. Canadian reverse mortage lenders typically offer a “no negative equity” guarantee. Importantly, a reverse mortgage can help you preserve other assets, meaning your overall estate plan stays intact. In many cases, this allows homeowners to live more comfortably without burdening their family.

Myth #3: Reverse mortgages are only for people who are broke.

Truth: This reverse mortgage misunderstanding is especially costly. Many financially secure homeowners use reverse mortgages strategically. Accessing funds via your home equity allows you to delay CPP or OAS, spread out taxable RRSP or RRIF withdrawals, and avoid a massive capital gains tax hit by planning the sale of investments in a tax-effective way.

By ignoring this option, retirees could miss out on tens of thousands of dollars in optimized cash flow or tax savings. Reverse mortgages aren’t a last resort, they’re a tool. Like any tool, the value depends on how you use it, and how it fits into your financial plan.

So, are reverse mortgages a good idea?

They can be. But, they’re not for everyone. The key is understanding how they work and whether they fit into your retirement plan. That’s where working with an experienced mortgage broker comes in handy. I help you weigh the pros and cons of reverse mortgages, compare the features and benefits of reverse mortgage lenders, and review your goals and financial picture with you. From there, we can arrive at the best option for your unique situation.

Let’s talk!

I’d be happy to walk you through your options, so please feel free to get in touch with me. My goal is to help you to make an informed decision. No pressure, just real information!

And if there’s a topic you’d like me to cover next, let me know!

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