The reverse mortgage programs are designed so that the applicants basically don’t have to do anything to administer or service them and in the event of passing, the mortgage administrators are there to repay the mortgage from the sale of the property.
For many, this is a great solution for retirement planning and eliminates the future need to figure out a home mortgage refinance or secure a second mortgage to gain access to addition funds if required in the future. For many elderly people, there may not be the family resources or close friends available to them to help coordinate the application for a residential home mortgage of some type or to administer the debt service and repayment once its in place.
But while the Canadian reverse mortgage programs may be a great fit for those looking for a totally hands off solution, they are also be viewed to be quite costly in terms of that the true effective cost of financing is over time. If individuals are interested in preserving estate value for their heirs, then other types of mortgage options should also be considered.
If there is enough income to service debt, a home equity line of credit may be something to consider as the funds can be drawn down as required, providing the lowest potential cost of interest in the process.
Perhaps a larger conventional mortgage could also work, provide that the applicants are going to have help managing the mortgage through the remainder of their years so as to not get into mortgage default or arrears situations.
The point here is basically the same one we make to all applicants looking to acquire Toronto home mortgage financing and that is for the applicant and their representatives to review their requirements and financial objectives with an experienced mortgage broker so that they can be matched up with the most relevant mortgage programs on the market whether that be a Toronto reverse mortgage or another program. Armed with proper information will allow seniors and their families to make a solid decision as to how to best finance the up coming retirement period and still allow for whatever estate planning objectives the property owners may have.