Our guest today is Elena Russell, BSc, PFP, FMA. Elena is a Business Development Manager with Home Equity Bank in the Edmonton South Region. She is here to talk about Reverse Mortgages and the misconceptions people have about them.
[0:20] What is a Reverse Mortgage?
- In Canada, a Reverse Mortgage is first charge and you retain ownership.
- We can lend 55% to maximum value of property and it leaves equity in the home
- The minimum age to qualify is 55 and typical approval is 25%.
[2:12] Why get a Reverse Mortgage?
- If you are struggling to make payments and working multiple jobs to keep up, it allows retirement, avoiding of care facilities, and to maintain a certain lifestyle during market lows.
[5:05] What kind of demand are you currently seeing?
- We are receiving more phone calls and engagement as people are at home due to the pandemic.
- People are discovering that if they lose their job they can’t qualify with traditional lenders.
[9:06] With a Reverse Mortgage, you can choose to make payments?
- There are no requirements, but you can make interest payments and are allowed to make 10% payment towards the principle.
[10:40] What impact is the grey divorce rate having on your clientele?
- There has certainly been an increase. You can utilize a reverse mortgage for spousal buyout.
[12:09] Are you able to put a Reverse Mortgage on a property you are buying?
- You could potentially blanket both properties if you are keeping your home.
[14:33] What are some of the current reasons people are getting Reverse Mortgages?
- Due to COVID-19, people are looking at financially helping out their children more.
[15:31] Are there situations that a Reverse Mortgage doesn’t make sense?
- If the applicant is still working full time, able to make payments and qualifies for a Home Equity Line of Credit.
[16:40] Do you have any final comments?
- Unlike in the US, in Canada you will not lose ownership of your home and you will never owe more than the property is worth.