You can own valuable real estate and still find your monthly cash flow restrictive. Retirement income may be lower than your working income, existing payments may take a meaningful part of your budget, and having equity doesn't necessarily mean you qualify to borrow against it through a traditional mortgage. For eligible homeowners, a reverse mortgage may be worth considering.
How it works
A reverse mortgage lets eligible homeowners, generally 55 or older, access some of the equity in their principal residence. Unlike a conventional mortgage, regular principal and interest payments generally aren't required while the borrower continues to meet the loan conditions. That can create breathing room. However, interest is added to the balance, so over time the amount owing grows and the remaining equity reduces.
Owning several properties doesn't automatically solve qualification
A homeowner may have significant real estate equity but limited income to support additional debt, and may not fit a high-net-worth program if their wealth is concentrated in ineligible assets. A reverse mortgage is a different assessment, generally secured against an eligible principal residence — not simply any property in a portfolio. Existing secured debt also needs to be addressed as part of the transaction.
The comparison that matters
- The improvement to monthly cash flow
- Interest costs, setup costs and repayment terms
- The effect on remaining home equity
- Plans to move, downsize or leave an estate
- Other options, including selling an asset or restructuring debt
You also remain responsible for obligations such as property taxes, insurance and maintaining the home.
Book a retirement mortgage review with CD Mortgages. We'll compare the options against your income, existing debt and plans for the property.