Imagine a scenario where your parents or parent has a townhouse or home with a small mortgage and credit line on it. They’ve used the small credit line to supplement their pension incomes and manage their fixed costs ( mortgage payment, strata fee and property taxes ) which eats up most of their income. Then comes an assessment, not a huge one, but enough to make them consider selling or downsizing.
They’ve lived there since they bought it as a pre-sale more than 30 years ago and nobody wants to them to move.
The possible answer: An equity release through a reverse mortgage that can pay out the existing mortgage and HELOC.
The benefit : No mortgage payment and a potential income source ( one that is not considered taxable income ).
Other benefits to consider:
a) Equity is conserved because of the growth in house value over time.
b) No tax consequences.
c) Payments can be made if desired.
d) Rates offered are very close to current prime mortgage rates.
e) Possibility of deferring property taxes ( may not be available with the current HELOC because of the size of the mortgage charge on title).
There’s a lot to think about, but there are many more benefits that will make reverse mortgages an attractive option to free up “the cash in the walls”.
Book a time to chat on my website or give me a call. I’m happy to help, always.
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