Most Canadians would like to age at home, so they are choosing reverse mortgages
The latest poll by HomeEquity Bank shows that more than 9 out of 10 Canadians want to live their retirement years in the comfort of their own home. In order to do it, they have to get a reverse mortgage.
As many as 95% of respondents aged 45 years and older say being able to “age in place” would “help them keep their independence, comfort and dignity.”
The results are almost unchanged from numbers seen in 2020, when a similar survey by the National Institute on Ageing found that more than 9 out of 10 Canadians plan to “support themselves to live safely and independently in their own home as long as possible.”
Meanwhile, seniors’ reverse mortgage debt went up to a record high level of $5.4 billion in February, which is over 18%, or $829 million, more than a year earlier, the report by the Office of the Superintendent of Financial Institutions (OSFI) says.
“Canadians who want to spend their retirement years at home shouldn’t be forced to choose between food and living expenses or having the support of PSWs,” – Steven Ranson, President & CEO of HomeEquity Bank, noted. “One can not overstate the importance of helping ageing Canadians with the access to affordable in-home care from personal support workers.”
It’s quite predictable that many seniors are choosing reverse mortgages, which let them take out the equity from their properties to finance their retirement.
As soon as homeowners reach the minimum age of 55, reverse mortgages are usually easy to get.
Such products allow senior homeowners to take out the equity in their home, either in a form of tax-free lump-sum or as monthly payments.
In case of reverse mortgages, seniors can not owe more than their home is worth. As a rule, the debt is paid off when the property is sold or the homeowner dies.
Although reverse mortgages don’t require any monthly payments from borrowers, higher interest rates (today, at about 5-6%) can easily take away all the proceeds from the house sale. However, most homeowners have benefitted from significant home equity hike due to growing prices during the previous years.