Mortgage Blog

6 Ways to Use a Reverse Mortgage for Retirement (and Transform Your Life)

December 14, 2021 | Posted by: Ronice Harrison

If you are looking for unique ways to finance and enjoy your later years, read on to find out how to use a reverse mortgage for retirement!

 

Are you a retired individual looking for ways to increase your financial security? If so, you may have heard of reverse mortgages.

Used correctly, this is one of the most effective financial products for retirees who own their home!

 

What is a reverse mortgage?

It is a loan against your home (or the part you own of it).

And the best part?

With a reverse mortgage, you are NOT required to make any monthly payments until you die, sell your home, or permanently move out!

Hence, reverse mortgages have become quite popular with retirees as a way to finance their later years. The money can be used for any purpose, including retirement income supplement, to pay off debts, to take vacations... Basically, to enjoy life!

You may be wondering,

'What happens after I pass away?'

Well, your heirs will inherit your home at its market value. Then, it's up to them.

They can either pay off your mortgage and continue to live there, or sell your home use the money to pay off your mortgage, and keep the rest.

 

Now, if you are interested in learning more about how to use a reverse mortgage for retirement, here are six unique ways compiled by our mortgage experts:

 

  1. 1. Use a reverse mortgage to supplement your retirement income.

One of the most popular uses for reverse mortgages is as a way to supplement retirement income.

If your savings aren't enough to finance your life, the money from the reverse mortgage can be used to cover the rest. This can help you preserve your retirement savings, and give you peace of mind knowing that you have a steady income stream.

Plus, you can continue to live in your home!

 

    1. 2. Cover unexpected expenses with a reverse mortgage.

 A huge benefit of a reverse mortgage is financial flexibility.

This type of mortgage allows you to use the money in any way you want, without having to worry about monthly payments.

This can be really helpful if you need to pay for a sudden expense, which many people experience in retirement. Unexpected medical bills, family emergencies, home repairs... You get the idea.

A reverse mortgage can help cover it all, without leaving you with the financial burden of a monthly payment.

 


    1. 3. Build a contingency fund, just 'in case.'

 A reverse mortgage or home equity conversion mortgage can be an excellent contingency fund. If you take a reverse mortgage out as a line of credit, the money will be available if and when you need it.

Many retired individuals lack a financial 'safety net' and end up suffering due to unexpected health or other costs.

With a reverse mortgage, you can sleep soundly knowing that emergency cash is there if needed.

 

    1. 4. Use a reverse mortgage to pay off other debts.

Debt can be a huge burden in retirement.

It's not easy to keep up with monthly debt payments on top of other costs associated with being a retiree.

If you have high-interest credit card debts or other loans, using the reverse mortgage to pay them off can be a wise decision. This will free up more money each month, allowing you to spend it however you choose.

You might be thinking, 'Aren't I just replacing one debt with another? That doesn't seem that wise.'

Well, that's a great question!

There are multiple benefits to replacing other debts with a mortgage. Mainly,

Lower interest.

Mortgage interest is the lowest that exists, so even though you still have debt, the payments will be smaller.

For example, using a reverse mortgage to pay off your credit card debt can reduce your interest payment from 20% down to just 3%!

No monthly payments.

With other kinds of debt, you will need to make regular monthly payments which can really become a burden...

But with a reverse mortgage, you don't have to pay until you permanently move out of your home, leaving you with extra monthly income!

 

  1. 5. Take a reverse mortgage vacation!

One of the fun benefits of reverse mortgages is that they can be used for anything you want... and this includes treating yourself to a vacation!

The money from the reverse mortgage can be used to pay for your trip to any destination, and you don't have to worry about making any monthly payments once you come back.

How's that for financial flexibility?

 

  1. 6. Help your loved ones with your reverse mortgage.

Maybe you don't want to wait until retirement to give some of your inheritance to your loved ones.

In that case, a reverse mortgage can be a great way to give them part of your home equity, while still living in your home.

It's a win-win situation. They get they need to thrive right now, and you get to stay in your home without added monthly payments.

 

And, there you have it!

Five unique ways to use a reverse mortgage for retirement. As you can see, there are many benefits to this type of mortgage.

If you're considering a reverse mortgage, be sure to speak with a qualified mortgage expert to see if it's the right choice for you. They can help you navigate the process and answer any questions you may have.

To get in touch with Ronice Harrison, our expert mortgage broker at AQRE Lending, give us a call at 844-424-2773 (ext 1) or use the contact form!

She will be happy to share how a reverse mortgage can benefit you and your family.

Thanks for reading!

 

This article was written by the team at AQRE Lending, expert mortgage brokers from Ontario, Canada. Read the AQRE Lending blog for more expert mortgage advice, home improvement guides, mortgage investment strategies, and more.

 

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