Reverse Mortgage Myth – The Bank owns my home

How to Qualify

Unfortunately, many Canadians make assumptions about reverse mortgages or they hear about it from a friend who themselves may not have as clear an understanding as they think.  Also, many Canadians assume Canadian reverse mortgages are the same as the products in the U.S., which are very different. The CHIP Reverse Mortgage is heavily regulated by governing bodies here in Canada and it is the only reverse mortgage product available.  Canadian borrowers can take comfort in this regulatory oversight.

 A longstanding myth is that a borrower with a reverse mortgage will end up owing more than the property is worth, giving the lender, HomEquity Bank, ownership of your home. This statement is false; in fact, HomEquity Bank has taken a number of measures to ensure the protection of your equity.

  • You retain title and ownership of your home

Just like with any other mortgage, your home is used to secure the loan which means that HomEquity Bank is registered as a standard charge on title. You, as the borrower DO NOT transfer ownership of your home. In fact, once it’s time to pay back the mortgage you or your heirs have the choice to repay the loan however you or they want. Selling the home is the most common option, but it is not mandatory.

  • Conservative lending

HomEquity Bank lends up to 55% of the value of the home depending on the age of the homeowner(s), property type and location of home. Homeowners 55+ are eligible for the product, but the younger you are, the less you will qualify for and the older you are, the more you will qualify for. This is simply a function of the fact that the younger you are, you are expected to have a long life ahead of you and the mortgage will not be repaid for a long time to come.  Given that no payments ever have to be made, in order to assure that the accrued debt does not get too burdensome, a conservative lending practice is followed.

  • Your home may appreciate in value

The total value of your home can appreciate in value, whereas the interest only accumulates on the actual  borrowed amount of the home (which is a smaller value). That is why over 99% of homeowners have money left over when their loan is repaid.

  • Negative equity guarantee

Often people assume that if your home equity depreciates in value at the time it is being sold, you or your heirs will end up owing more than the house is worth. This is simply not true. It is written into the mortgage terms that the borrowers will never pay more than the fair market value of the property at the time of sale.  Borrowers are required to keep their property taxes up to date, and maintain the condition of their home. If these conditions are met, you will never owe more than the fair market value of the home at the time it is sold.

The above measures ensure CHIP Reverse Mortgage customers will not be at risk of losing their home. In fact, a reverse mortgage can be a great solution that allows Canadian seniors to stay in their home for as long as they wish.

For more information or to find out how you can get a reverse mortgage please feel free to contact Joanne at 1-855-770-3225 or 819-639-8867 or joanne@mortgagesforseniors.ca.

 

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