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Best Alternatives To a Reverse Mortgage in British Columbia, Canada

Find out more about the best alternatives to a reverse mortgage in BC, Canada.

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Reverse Mortgage Lenders Said "No"? We Have Solutions!

Are you a Canadian homeowner aged 55 or older looking to access the equity in your home without monthly mortgage payments? A reverse mortgage in British Columbia, Canada could be the solution you need. With a reverse home mortgage, you can access up to 55% of your home’s value in tax-free cash while retaining ownership and continuing to live in your primary residence. 

If you are wondering which type of loan would be more suitable for your needs, we provide options through both banks and alternative mortgage lenders that enable home owners to access funds using the equity saved up in your home.

What Is a Reverse Mortgage?

A reverse mortgage is a unique type of loan that allows homeowners in BC, and throughout Canada, aged 55 and above, to access a portion of their home’s equity without having to sell or make regular payments. 

With a reverse mortgage, you can access up to 55% of your home’s appraised value in a lump sum or through scheduled cash advances. The loan amount plus interest accrues over time, and the entire loan balance becomes due when you sell your home, move out, or pass away.

Unlike traditional reverse mortgage brokers, through our select group of private lenders in British Columbia, we offer flexible solutions with no age restrictions. Whether you’re 55 or 75, our team can help you access your home’s equity through alternative lending options, including second mortgages behind a reverse mortgage. Reach out to explore your options.

Benefits Of a Reverse Mortgage in British Columbia

  • Access tax-free cash from your home’s equity
  • No monthly mortgage payments required
  • Retain ownership and continue living in your home
  • Use funds for any purpose (renovations, travel, debt consolidation, etc.)
  • Qualify based on your home’s value, not your income

Alternatives To a Reverse Home Mortgage

While reverse mortgages can provide valuable financial flexibility, they may not be the best option for everyone. Alternative solutions to a reverse home loan include:

You should also be aware that reverse mortgage interest rates are generally higher than traditional mortgage rates, as the lender doesn’t receive any payments until the loan is repaid in full. Additionally, there are initial setup costs and fees associated with a reverse home mortgage, such as appraisal, legal, and administrative fees.

Another Option: Short-Term Equity Release

For those seeking an alternative to a full reverse mortgage, there’s an option without age restrictions. Fraction Mortgage offers a product with the following features:

  • No monthly payments required
  • No age restrictions
  • Fully open to payout without penalty
  • Terms up to 5 years

This short-term solution can provide immediate financial relief, but it’s important to plan for the future. At the end of the 5-year term, you’ll need to consider your next steps, as renewal is not guaranteed. This option is best suited for those looking for a temporary financial solution while exploring long-term alternatives.

Bank Alternatives

Select banks and credit unions have equity products that allow homeowners to access home equity without relying on traditional debt servicing. Your income has less to do with approval.

  • You can sometimes qualify for a larger mortgage amount than a reverse mortgage
  • Low bank rates
  • Traditional bank terms
  • Significantly lower costs
  • Does not erode future home equity
  • Funds can be used to make or supplement payments
  • Payments are required
  • Credit scores must be good to qualify
  • May require additional assets to obtain funding higher than 50% of homes value

Home Equity Alternative 

Reverse mortgages are the best solution for someone searching for a long-term source of income while in comparison, home equity loans better fit the needs of clients who are looking for short-time cash which they can repay. 

A home equity loan allows you to borrow money up to a certain percent of your home’s value, an amount which in some cases can be even higher than a reverse mortgage’s limit. When the options of a reverse home mortgage or equity loan through a bank doesn’t fit we have private lending to consider.

  • Will register behind a 1st mortgages—a blended rate calculator can help you see if the rate of a 1st & 2nd mortgage is actually cheaper than obtaining a reverse mortgage
  • Allows you to access significantly more home equity than the reverse mortgage programs in British Columbia
  • Does not rely on income or credit to qualify
  • Will consider smaller markets at reduced loan to values
  • Interest rates are higher than traditional lending & reverse mortgage lending
  • Higher registration & administration costs than traditional lenders
  • Estate issues if passing away

Can You Get a Second Mortgage Behind a Reverse Mortgage In BC?

We have private lenders that will consider second mortgages behind a reverse mortgage. Lenders will only renew the 2nd mortgage for a few years. This is due to the 1st mortgage charge growing in front of the 2nd mortgage charge.

There Are Three Main Lenders For Reverse Mortgages In British Columbia:

  1. CHIP HomeEquity Bank. This is available across Canada through a mortgage broker or directly through HomeEquity Bank.
  2. Equitable Bank has a product called PATH Home Plan. This product is only available in select provinces.
  3. Bloom Finance Co. offers the Bloom Reverse Mortgage product in British Columbia and other provinces across Canada through mortgage brokers.

To learn more about reverse mortgages in BC, get a free quote, or explore alternative options, contact our team of experienced mortgage brokers today. We’ll help you make the best decision for your unique financial situation.

Contact Us Through Our Online Application.

FAQs

Reverse mortgage interest rates tend to be higher interest rates than traditional mortgage rates. Lenders like CHIP HomeEquity Bank and Equitable Bank generally charge higher reverse mortgage rates because with a reverse mortgage the lender does not receive any interest payments or monthly mortgage payments until the entire loan balance is repaid, usually when the borrower dies or sells their home. 

However, some reverse mortgage lenders may offer promotional lowest rates. Please contact us to learn more about who these are. 

Yes, many Canadian homeowners choose to get a reverse mortgage to pay off their remaining traditional mortgage balance or other debts. The reverse mortgage funds can provide cash flow for paying off loans, credit cards, or even property taxes and condo fees. Using a reverse mortgage in British Columbia allows you to access your home’s equity in a lump sum of tax-free cash without having to sell your own home.

In addition to the interest rates, there are typically initial costs and legal fees involved when setting up a reverse mortgage contract. These can include appraisal fees to determine the value of your home, as well as lender administration charges. It’s important to understand all costs upfront when getting a reverse mortgage.

Many older Canadians who receive the Guaranteed Income Supplement (GIS) are able to qualify for a reverse mortgage, as eligibility is based primarily on the home’s equity and appraised value, not your income level. However, getting a large lump sum could potentially impact your GIS payments, so be sure to discuss this with your mortgage broker when exploring reverse mortgages in BC, Canada.

With a reverse mortgage, you retain ownership and can continue living in your primary residence. However, if you decide to sell your home or move out of your principal residence, the reverse mortgage balance would become due at that time. 

The sale proceeds would go towards paying off the loan balance, interest charges, and any associated fees with a reverse mortgage. The last borrower would need to pay off the entire loan when leaving the home or face selling to cover the debt.

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