How a Reverse Mortgage Can Help You Pay for the Things You Need
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Canadians are increasingly turning to reverse mortgages to live the kind of retirement they deserve. Last year alone, CHIP Reverse Mortgage® inquiries more than doubled.
Having to contend with lower Canada Pension Plan payments, reduced or non-existent company pensions, inadequate retirement savings and the continually rising cost of living, many retirees are struggling financially. This is where the CHIP Reverse Mortgage can help. The amount you can borrow depends on several factors, including your age, the value of your home and your location. The minimum you can borrow is $25,000, and the maximum we can lend to a customer is 55% of the home’s value (depending on the factors we mentioned above).
Our customers don’t just use a reverse mortgage to boost their retirement income; they also use it to help overcome the challenges of aging at home, as well as financing a more fulfilling retirement. We take a look at the costs involved and some of the most popular reasons to take out a reverse mortgage.
Most Canadian retirees want to maintain their independence and 93% of them are determined to stay in their home during their retirement, according to a recent Ipsos poll. However, as health and mobility issues start catching up, many people need to make changes to their home to make it possible to live there comfortably for their remaining years.
Accessibility renovations often include bathroom retrofits or installations, including walk-in showers, fold-down shower seats, raised toilets and grab bars. Other renovations include expanding the width of doorways, installing ramps for entranceways and stair lifts or home elevators. Comprehensive accessibility renovations can typically cost tens of thousands of dollars, but for many retirees it’s a price worth paying to maintain their independence and stay in their home.
If you’ve been in your home for many years and want to stay there for many more, you will probably be ready to invest in some improvements. Typically, AC units need replacing after 15 years, kitchens need a renovation every 20 years and you normally need new windows every 15-20 years.
A new kitchen: can cost anywhere between $25,000-50,000, depending on the kind of cabinets you want, flooring, countertops and appliances. Any structural work would bring that total considerably higher.
New bathrooms: can cost between $5,000-13,000, depending on the size and can be much more if you’re looking for a complete remodel.
Replacing drafty windows: will cost around $1,000 per average-sized window. The price can increase substantially if you go for wood, fibreglass or aluminum options.
Taking bucket-list vacations or buying a vacation property
For many people, retirement means having the time to really travel and see the world, but vacations, especially more exotic ones, don’t come cheap.
Tours of China, Australia or Europe can easily cost $3,500 per person. If you and your partner wanted to take a dream vacation every year for the next five years, while you are still able to enjoy travel, you would need around $35,000 plus spending money.
If you prefer to vacation closer to home, a reverse mortgage can be used to buy a vacation property. Some parts of the country still have waterfront cottages for under $200,000, so you could use a reverse mortgage to buy one outright. For more expensive cottages, a reverse mortgage could be used for a healthy down payment.
Paying off the mortgage and pesky debt
By paying off their current mortgage with a reverse mortgage, retirees can increase their monthly cashflow substantially. Even paying off a mortgage of $100,000 could effectively increase monthly income by as much as $973*.
Paying off credit card debt, or consolidating debt in general, is another very popular use of the CHIP Reverse Mortgage. It can free you from monthly payments and high interest rates associated with credit cards that can be easily in the range of 18-24%.
Boosting your retirement income
For many of our customers, their income is simply not enough to fully enjoy their retirement or maintain their desired lifestyle.
By using the funds from the CHIP Reverse Mortgage of, say, $120,000, you would have an extra $1,000 per month, tax-free, for 10 years. This can be the difference between scraping by in retirement and really enjoying it.
How much can you borrow?
The amount you are eligible for will depend on your gender, age, the location and value of your home and how much you currently owe. The maximum we will lend is 55% of your home’s value.
Use our calculator to work out how much you could qualify for and then call us at 1-866-522-2447 so we can confirm exactly how much tax-free cash you can access.