Reverse Mortgages vs. Home Equity Lines of Credit:
Looking for a loan you can live with?
If you want to access the equity in your home without selling your house, most people think of a Home Equity Line of Credit first. But, if you’re over 55 and own your own home, there may be a better option: a Reverse Mortgage.
Which is better: A Home Equity Line of Credit or Reverse Mortgage? Lets Compare and see.
With a line of credit, you borrow money and begin paying it back (with interest) immediately. This makes sense if your needs are short-term and you have the income to pay it back quickly. But what if you need the money for a longer period of time? Then you have to be prepared to make regular monthly payments for some time to come. If you’re like many Canadians living on a fixed income, these extra monthly payments could be too much for your budget to handle over an extended period of time.
A Reverse Mortgage is different because you can choose not to make any payments until you decide to move or sell your home. Instead, the interest simply compounds on the outstanding balance of the Reverse Mortgage while the entire value of your home also continues to appreciate. When you sell your house, you pay off the accumulated amount of the loan and keep the rest.
Reverse Mortgages are designed specifically for Canadian homeowners who don’t want to service a loan over time or have concerns about their financial position in the future.
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