Reverse Mortgage or HELOC (Home Equity Line of Credit)?
The choice between a reverse mortgage or a HELOC can sometimes be a difficult one. Both have their advantages and disadvantages.
The 2 are similar in ways: they both allow you to borrow money using the equity in your home as collateral. The main difference is that with a reverse mortgage, the borrower doesn’t have to make monthly payments until he/she moves, sells or no longer lives in the home. This can be a good option for seniors who would struggle to make monthly payments. Here are the main catches:
1. You must be 55 years or older.
2. The interest rates are higher (can be double conventional mortgage rates).
3. Closing costs are more expensive.
So eliminating those monthly payments comes at a cost.
With a HELOC, you make monthly interest payments only on the money you withdraw. The interest rates are generally lower than the reverse mortgage and the closing costs are generally less expensive. However, with a HELOC, the lender can change the terms with little or no notice by adjusting the rate and/or the limit so it can be a riskier option for seniors.
If you would like to discuss reverse mortgages, home equity lines of credit, or conventional mortgages, please do not hesitate to contact Robert at 905-574-9200 Ext. 215. Robert is a mortgage agent located in Hamilton, Ontario serving Hamilton, the surrounding area and the rest of Canada.