Cash strapped retirees pile into reverse mortgages: report
It's not uncommon for many retirees to take out small loans against their home equity to fund renovations or even to make down payments on an additional property.
More and more, however, older homeowners are finding they need to squeeze a bit more income out of their house. That's leading to record number of reverse mortgages in Canada, according to a recent HomEquity Bank study.
Reverse mortgages are offered to Canadian homeowners 55 and older and have no income, credit or health hurdles to cross. As well, unlike traditional loans, borrowers don't have to service the interest or repay the principal for as long as they own their home and are still living in it.
Business seems to strong. HomEquity, the only national provider of reverse mortgages in Canada, says its reverse mortgage business was up 42% in the fourth quarter of 2011. On an annual basis, the company wrote $239 million in reverse mortgages, a 16% year-over-year jump that lifted its portfolio of reverse mortgages to $1.2 billion.
Sure seems like an expensive way to fund your retirement. The amount you owe increases over time, while the amount of equity in your home decreases. What's worse, the younger you are, the more the compound interest will grow, and the more you'll owe.
Right now, HomEquity is charging 4.75% on a variable-rate mortgage which is 1.75 percentage points above prime. Five-year terms are available at 5.95%. That compares with rates as low as 3% for more conventional five-year mortgages.
A good deal? A necessary evil in a low-rate environment? Do you see a reverse mortgage in your future?
By Gordon Powers, MSN Money
Posted by: Q | Jan 18, 2022 10:48:51 AM
HomEquity (specifically Briant and Ranson) and all the other usurious "reverse mortgage lenders", should be shut down, if not just hung. These bottom feeding bastards do nothing but take advantage of those who can least afford to be financially abused. I equate them and their ethics and morals to those of pawnbrokers and carbon credit boosters. The only good thing that might evolve from a total real estate collapse, would be the painful demise of these parasites. Our government will eventually label these bottomfeeders for what they are, as they will be looking to place the economic blame on those that they originally enabled to steal.
Posted by: fredderfong | Jan 18, 2022 12:11:40 PM
Right on these guys are probally a bunch of $#%^^& lawerys who are all #@^%&& crooks anyway
Posted by: Al-man | Jan 18, 2022 1:11:45 PM
I wouldn't buy into a reverse mortgage even if I was swimming ass deep in twenties. Reverse mortgages fit into the same catagory as payday loans and pawn shops. All rip offs or scams. If all three could be shut down or made illegal, there would be a few less problems in the country.
Posted by: don | Jan 18, 2022 7:31:13 PM
Although I dont like the reverse mortgage idea i do think it is a sign of the times. How much longer until the government wants you to finance your own retiirement with your home/assets? Many retirees have equity in thier homes and numerous assets but no cash. Is it fair for the younger generation to pay for the retirement of someone sitting in a million dollar home when they can not afford a home of there own?
Posted by: Mariana | Jan 19, 2022 12:37:49 AM
I never do that , this is another method to keep home owner slave to the banks , so that mean that system let you to breed little but they don't let you to die , because, are so hungry to get more $$$$$$$$$$$$$$ from the people......................
Posted by: deab | Jan 19, 2022 3:26:10 PM
What is the point of paying off your mortgage if you are going to do this in the future?
Renting out part of you home is a better option. My inlaws get $1200/mth by renting their basement. Their utilities average $240/mth more with the tennant. That is a nice chunk of change and their house is still paid for and theirs not some reverse mortgage lender.
Posted by: Albert | Jan 20, 2022 1:12:48 AM
I was considering a reverse mtge. as part of my retirement financing, after all, I cannot take the house with me when I die. Those so dead set against it - are you more concerned about yourself and what you think is your god given inheritance.
Posted by: Neil Steffler | Jan 20, 2022 8:02:15 AM
I think any time someone wants to lend you money with no payback till a later date is just taking advantage of people who are hitting on bad times sell your home and down size you will sleep better at night, as for the young person whom does not think it fair to pay for our retirement we all started out the same way my advise too all young people is save your money like most retired people did and you will make out okay , and some dayy some young people will be paying your pension
Posted by: Carrie Dubois | Jan 23, 2022 5:50:47 AM
I am a retiree who is contemplating taking out a reverse mortgage. I've had to return to work part-time to make ends meet. Even with CPP and OAS, a small private pension, a RIFF and RRSPs, I still need the extra cash. Who cares if there is no equity left in my home when I die... I don't have any children, only two siblings left and nieces and nephews. What have they ever done for me, I should do without so they can inherit something??? I think not!!!
Posted by: terry | Jan 23, 2022 9:10:53 AM
if the situation is right for you, then do it. As Albert and Carrie said, its perfect solution for them. With todays economic problems, our seniors and war vets are living on less and less...imagine, they can actually remember when break and milk could be purchased for less than $.50, so with prices today, its no wonder they want to live a little, why save it all for the kids when you die?
Posted by: Mr.Mischief | Jan 23, 2022 10:22:38 AM
Lost in all the justified hoopla about stupid borrowers and scummy lenders is the REALLY UGLY bottom line on these reverse mortgages: once your home equity/mortgage interest reaches a certain balance (that balance decided exlusively by the lender) you can then be LEGALLY FORCED to sell your home to pay back the loan! You get roughly ten years to play with the money and then poof.....you are homeless sucker!
Posted by: Lancelot | Jan 23, 2022 11:22:48 AM
Once these guys are out of business . . . voila! The governement will step in and offer a similar program with worse consequences, but likely there will be no choice for many cash-strapped home owners. Once the pension fund has dried completely the governement will target those 'rich' people who have home equity. If you have over a set (by the governement) amount of assets - even with no cash flow - it's likely they will make you cough it up - by refusing you a pension becasue you have assets
.Those who have never contributed and the MP's who can barely survive on a 75K pension will be first in line. CYA. It's always been the case.
Posted by: Rox In TO | Jan 23, 2022 3:11:23 PM
There are record numbers of retired people obtaining reverse mortgages, because the government pension and income supplement are NOT enough to survive on. When you add property taxes, food, utilities and other MODEST Living costs you end up with a monthly deficit. Government and Banks know this, and Like the Sharks they are, they prey on the weak and poor. Some Golden Years EH!!
Posted by: magda | Jan 23, 2022 3:22:43 PM
It makes more sense to sell the house, rent an apartment and live off the proceeds of the house.
Posted by: thelittlerascals:) | Jan 23, 2022 4:44:49 PM
it's like shaking hands with the devil when it comes to reverse mortgages.
I'm with Magda on this one.
Posted by: Think about it | Jan 23, 2022 5:31:13 PM
My mother did this when my father past away. It pais off the bills and she had money to invest as well. As long as you pay the interst yearly, which she did, you will still have your equity inthe house. It is only if you opt not to pay the interest where the dollars can add up.
I say if you need to do this then do it BUT pay the interest. This is an option that they do give you.
She sold her house 2 or 3 years later and she paid back the original amount borrowed, the interest had been paid yearly so no extra there. She walked away with a good amount of cash still. Do it smartly.
Posted by: Rene | Jan 23, 2022 5:33:06 PM
I will never get a reverse mortage. The only people that make money on this is the bank. The best way to get money if you have a house is to sell it get an apartement and live off from the profit.
Posted by: Cranky Dad | Jan 23, 2022 6:11:15 PM
Get a line of credit from a real bank, if you really, really, need money, using the house as collateral. My line of credit only costs me 4%. Be carefull it doesn't get too big though, and pay more than the minimum each month or you will never pay it off. Of course, if you are planning to die and let the bank have the house to pay the debt, it is just a cheaper way to get a "reverse mortgage". Talk to an advisor at a real bank.