Starting Points & Strategies

What, Who, How, Why

What is a Reverse Mortgage?

A loan secured against the value of a homeowner’s principal residence.

Who qualifies for a Reverse Mortgage?

Homeowners age 55 or older who live in their primary residence and has a low mortgage balance or is mortgage-free.  A homeowner can apply for a Reverse Mortgage with the help of a mortgage broker, as well as a lawyer who can review the terms of the Reverse Mortgage and clarify how it will affect their heirs and estate planning.

How does a homeowner qualify for a Reverse Mortgage?

There is no need to qualify by debt service ratios or income level, additionally, Reverse Mortgages will not impact pension payments.  Furthermore, the funds withdrawn are tax-free and the homeowner maintains ownership of the home.

Up to 55% of the home equity can be accessed.

No monthly payments are required; however, optional interest payments can be made.

Why would a homeowner want a Reverse Mortgage?

These are the different Strategies that can be used with a Reverse Mortgage:

• First time home buyer – gift from grandparents/parents – help adult kids to purchase home without touching savings of grandparents/parents
• Living inheritance, tuition gifts to family members
• Debt consolidation
• Monthly income
• Renovations
• Divorce/separation – use equity to buy second home for other spouse so can wait for good time to sell, no rush to sell immediately
• Down-sizing – use equity for downpayment to avoid having to use “condition to sale of home”. Allows for time to transition into a new home.
• Proactive down-sizing – Purchase down-size property now, rent out until ready to downsize. Use rental income for vacations, etc.
• Purchase investment property, vacation home, able to purchase a “unique property, rural property, remote location” more easily

**Using Reverse Mortgage funds for investing means interest is tax-deductible

Written by Kim Franz

Refinancing Your Mortgage in 2025.

Refinancing your mortgage can be a smart financial move for many reasons, and as your trusted mortgage advisor, I’ve seen how much it can benefit homeowners!

Ideally, refinancing is done at the end of your mortgage term to avoid penalties, but the timing can vary depending on your goals. For some, it’s about unlocking the equity in their home to fund renovations or cover big expenses like college tuition. For others, it’s an opportunity to consolidate debt, lower their interest rate, or change up their mortgage product.

Let’s take a closer look at some of the ways refinancing your mortgage can help!

• Get a Better Rate: As interest rates have continued to decrease with the Bank of Canada updates these past few months, now is a great time to consider refinancing for a better rate and lower overall mortgage payments!  Experts anticipate the Bank of Canada will move to have the overnight rate down to 4.0% at year-end and potentially down to 2.75% for 2025.
• Consolidate Debt: When it comes to renewal season and considering a refinance, this is a great time to review your existing debt and determine whether or not you want to consolidate it onto your mortgage. In most cases, the interest rate on your mortgage is less than you would be charged with credit card companies or other forms of financing you may have. Plus, having all your debt consolidated into a single payment can keep you on track!
• Unlock Your Home Equity: Do you have projects around the house you’ve been dying to get started on? Need funds for a large purchase such as a new vehicle or post-secondary education? When you are looking to renew your mortgage, it is a great opportunity to consider refinancing in order to take advantage of the home equity you have built up to help with these larger changes in your life!
• Change Your Mortgage Product: Are you unhappy with your existing mortgage product? If you have a variable-rate or adjustable-rate mortgage, you may be considering locking it in at the lower rates. Alternatively, you may want to switch your current fixed-rate mortgage to a variable option with the interest rates expected to continue decreasing into 2025. You can also utilize your refinance to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

PLUS! Some latest changes by the Government of Canada will make it even easier for you when it comes to your renewal and refinancing options:

• Those of you who may have an uninsured mortgage will no longer have to pass the stress test as of November 21st. This means that you have more flexibility when it comes to rates and mortgage products in renewal cases where you wish to switch lenders without adding additional funds to your mortgage!
• Beginning January 15, the federal government will allow default-insured mortgages to be refinanced to build a secondary suite. If you’ve been considering adding a suite to your property, you may be eligible to access up to 90% of your home’s equity for this purpose.

Written by my DLC Marketing Team