As we age the challenges that we will have to face in life increases, the loss of independence with diminishing physical ability makes life further more difficult. But regaining your loss of independence especially financial independence could give you a lot of peace of mind. But how is it possible to regain your financial independence considering your aging factor? That is where the reverse mortgage system comes in.
Reverse Mortgage System
A Reverse mortgage is a special category home loan, which does not require monthly payments, unlike other home loans. It is similar to all other loans there will be interest in the loan, but you need not have to pay monthly payments. The interest will be added to the amount owed. For further details click here
Key Features In A Reverse Mortgage Home Loan
No monthly payment, you need not have to pay monthly payments for the loan that you have obtained.
Interest added to the loan, as similar to all loans there will be interest for this type of loans too. But you need not have to pay it on a monthly basis instead it will be added to your loan amount that you have to repay.
Factors To Consider While Opting For A Reverse Mortgage Loan
- You need to take in to account the home equity growth since you are not going to have to pay the monthly
- You need to calculate how much the interest added to the loan will grow in time with the growth of your home equity.
- The Reverse mortgage loan system differs between Canada and the US; people usually get confused between the US and Canada system.
- In the US to qualify for a reverse mortgage loan system at least one spouse must be 62 years of age, whereas in Canada to qualify for a reverse mortgage loan system both the spouses have to be over 55 years of age.
- The most important differentiation is, In US to be eligible for the loan qualification of one spouse is enough, whereas in Canada both the spouse has to qualify to obtain the loan.
- Applicants must acquire independent legal advice before getting approved for the loan in Canada, but this type of legal advice is not necessary for the US.
- The fee associated with setting it up and other ongoing fees like consultation charge, service charge, for a reverse mortgage loan are higher in the US than compared to that of Canada.
- Crediting payments for your loan is voluntary; you can pay back a little monthly for your loan if you want to. For an instant, you can pay the monthly interest for your loan so that you do not allow the piling up of money that has to be repaid at the very end. However, it is a voluntary decision that has to be made by the borrower. Choosing to credit payments monthly for the loan is voluntary both in US and Canada.