For many people, staying in their own home for as long as possible is a dream that they aren’t quite sure how to achieve. According to Andre Deleo, President and Principal Broker with Morgix, there are mortgage products that can help make that dream into reality.
“While retirement home living works for some people, it isn’t for everyone. There are many people who would rather age in place with in-home health care rather than sell their homes and move into a group living facility. A reverse mortgage may be a good option for homeowners who would rather not sell,” says Andre.
What is a Reverse Mortgage?
A reverse mortgage is designed for homeowners over the age of 55 who have a significant amount of equity built up in their home.
Instead of paying the bank a monthly mortgage payment, with a reverse mortgage you are borrowing on your equity and you receive a tax-free payment each month. The loan is paid off once the home is eventually sold.
“A reverse mortgage offers financial flexibility, allowing you or your family members to unlock up to 55% of their home's value without monthly mortgage payments. It enables you to maintain your quality of life while living in the home you love,” says Andre.
In-Home Care vs. Retirement Home Living
If you or your family member are considering moving into a retirement home, it is important to understand the financial implications.
“Retirement homes typically charge $3,000 to $5,000 per month for accommodation, meals, and services. These expenses can quickly deplete traditional retirement savings. In addition, selling the family home to move into a retirement home can result in the loss of valuable home equity and it might not cover all of the ongoing costs,” explains Andre. “For example, Diana, 53, is helping her mother, Rebecca, 77, move into an Ontario retirement home with annual costs of $48,000. With $272,000 in savings, Rebecca's funds would be exhausted in just six years if she proceeds with the move.”
He continues, “There is an alternative, though. A reverse mortgage can leverage Rebecca's $1,200,000 home to provide her with $527,000 in tax-free cash. This can be used for in-home care, such as a Personal Support Worker or home renovations to make her home more accessible to navigate during her golden years.”
Finding the Best Option for Your Unique Situation
While there is no universal best option for everything, it is important to carefully consider a number of different scenarios. Speaking with a professional with experience in mortgages and financial planning can help you to understand your options.
Andre suggests learning about and discussing the options with trusted family members. He says, “Involving family in the conversation from the beginning generally leads to the best solution since each person’s situation is completely unique.”
For more information about reverse mortgages, make an appointment with Andre or one of his team members. Call Morgix at 1-844-466-7449 or visit them online.