Canada will soon have a 2nd company offering reverse mortgages. Seniors Money International (SMI) will launch Monday in Toronto and then go national next year.
Canadian Home Income Plan Corp. (CHIP) is the only mainstream reverse mortgage option currently available in Canada. CHIP has 6,560 reverse mortgages outstanding.
SMI will compete in several ways with the biggest difference being its roughly 0.75% lower interest rates.
It will be interesting to see how CHIP responds.
I’m glad they’re requiring customers to consult with a lawyer. Amazingly some people who get reverse-mortages don’t realize that YOU LOSE YOUR HOUSE AT THE END OF IT! (I don’t know *why* they think these nice people are giving them money every month, but there you go).
While a reverse mortgage ends when the house is sold or the mortgagee dies, this might be a good option for a senior that doesn’t have any children – what’s the point in having a paid-off house in your estate if there isn’t anybody to inherit it?
A reverse mortgage is basically a trade between you and the mortgage company. You offer the mortgage company a boatload of money in interest, and in return they give you a wad of cash up front. The major “losers” in this deal are any people that might be hoping to inherit from your estate, because a reverse mortgage is a good way to spend your children’s inheritance.
Children don’t have a god-given right to inherit anything. Most parents work hard for their money over decades. They should spend it any way they want. If that upsets the kids then we know where the kids’ priorities lie.