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Is reverse mortgage for you?
Oct 26, 2015
Is Reverse mortgage a helpful cushion for seniors?
Although a reverse mortgage is not for everyone it can be very helpful in certain situations. Here is a helpful question and answer scenario that could be helpful in two different circumstances. And, so we go to Jeffrey Cowan, Legal Matters, Metro Canada.
Questions and Answers:
Someone’s elderly mother on a fixed income was being supplemented by her children to cover her bills.They don’t mind doing it but their mother does not like sacrificing her financial independence .
She owns her home outright and a friend had suggested a reverse mortgage.
How do they work and are they safe? Here are two key questions:
Mr. Cowan responds :
Reverse mortgages offer anyone over 55 the ability to borrow up to 55% of the appraised value of their home without having to make monthly mortgage payments. As long as the homeowner maintains the property, pays the taxes and insurance they will not be forced to pay back the loan.
When the senior decides to move and sell the property the funds are then paid back. This has become an increasingly popular way to leverage the largest asset to ensure the a senior lives comfortably without having to sell the house.
This is a safe way of adding income to a senior’s annual retirement funds.
Not all Canadian home buyers are eligible for the HST rebate. In this situation a Canadian citizen is purchasing a condo with the intention to rent but is living out of the country. The plan is to potentially move into the condo on their return. Their accountant suggested putting the property into the name of their Canadian company would not be eligible for the HST rebate.
The Canada Revenue Agency offers the HST rebate and to be eligible you have to be a resident of Canada for income tax purposes. If you live outside of Canada and are not paying income tax you would not qualify. Purchasing property using the Canadian company also would not make the person eligible. Either way the builder has to be paid the rebate The second criteria is that by living outside the country the purchase cannot be claimed as a primary residence. In this instance the rebate savings cannot be obtained.
Article adapted from Jeffrey Cowan Legal Matters Metro Canada