Banks that offer Reverse Mortgage Products have 4 key safeguards in place to ensure that your client’s equity is kept safe and secure, busting many of the misconceptions surrounding reverse mortgages.
You always retain title and ownership of your home
While your home is used to secure the loan – and the Bank is registered charge on the title – you do not transfer home ownership to the bank. Just as it is with a regular mortgage.
Lending amounts are conservative
Banks lend up to 55% of the value of the home, while factoring in the homeowner’s age, property type and property location. The older you are, the higher the loan amount you can qualify for. This is done so that the reverse mortgage never exceeds the value of the home.
Homes typically appreciate in value
The total value of the home is likely to appreciate over time — especially if it is located in a major city. Meanwhile, only the interest on the borrowed amount accrues. Based on that differential, even a modest home appreciation allows for equity preservation with the Reverse Mortgage in place. This is why over 99% of homeowners have money left over when their loan is repaid.
No Negative equity guarantee means loan can never be more than the sale price of the home
Many people think that if their home equity depreciates at the time of sale, they/their heirs will end up owing more than the house is worth. However, the Bank guarantees that if the home depreciates in value and the mortgage amount due is more than the gross proceeds from the sale of the property, the Bank covers the difference between the sale price and the loan amount* (as long as the property taxes and mortgage obligations are met).
At www.HomeIncomePlans.ca we are focused on preserving your equity. That is why we highlight these safeguards to ensure that you will not be at risk of losing your home when accessing your home equity.
Contact me to find out more about how a reverse mortgage is actually a great way to improve cash flow, save taxes and plan your retirement while allowing you to stay in your home.
*The guarantee excludes administrative and interest that has accumulated after the due date.
Learn more by clicking here to watch a short video.