When you obtain a reverse mortgage, you're getting a loan that enables you to access the value of your home without actually having to sell it.
As with all loans, you'll eventually have to repay the money you borrowed (in this case, it's when you sell your home), which means an interest rate is associated with your reverse mortgage.
We'll explain some factors that can impact the reverse mortgage rate for your Toronto home.
How Much Do You Want To Borrow
With a reverse mortgage, you can access up to 55% of the value of your home. However, lenders consider several factors, including age, when determining how much they want to lend you.
They may not be willing to lend you the complete 55%. If, however, you're willing to pay a higher interest rate, the lender may be willing to lend you more for your Toronto home than they would at a lower reverse mortgage rate.
How You Want To Access The Funds From Your Reverse Mortgage
Depending on the type of reverse mortgage you apply for, you can get both a lump sum when your request is approved and monthly or quarterly payments. The lump sum may have a different interest rate than your quarterly or monthly payments.
The Fact That Reverse Mortgages Are Costly For Lenders To Fund
Reverse mortgage rates can sometimes be higher than traditional rates due to factors that can be costly for lenders to fund. With a reverse mortgage, you don't have to make any monthly payments (not even interest!) for the entire time you have the loan, increasing your lender's costs.
In addition, there are no government programs to help lenders bear the costs of reverse mortgages like there are for traditional mortgages.
How does a reverse mortgage work with Northwood Mortgage?
At Northwood Mortgage, we'll take the time to sit down and explain to you exactly how a reverse mortgage works and what kind of reverse mortgage rates we can offer you for your Toronto home.
In addition, we can explain to you the different ways you can receive the funds from your reverse mortgage, such as a lump sum or a monthly payout.
As with all loan products, knowing the pros and cons of a reverse mortgage is essential! We'll ensure you're clear on whether or not a reverse mortgage is a good choice for you; if it isn't, we have many other loan options we can recommend!