Abstract:
In this paper we will discuss about the
Reverse Mortgage system of Canada. The elder Canadians have only their homes as a main form of asset. Therefore, the idea of reverse mortgage would be helpful to them. They can make a huge money and also enjoy the ownership of their homes simultaneously.
In Canada, many of the elder citizen's only asset is their home. Therefore, the idea of a reverse mortgage is very much acceptable to them.
Let's explain it with an example. Suppose a woman gets divorced with her husband and in the separation she has got the home. Later she may sell the home. Now she is house rich but at the same time money- poor. Therefore, the reverse mortgage have some goods and as well as bads.
Some single elder women or men have their own houses but don't have the money to repair or renovate it. Then the idea of reverse mortgage is helpful to them.
These examples are not hypothetical but related to each other. The average senior citizens of Canada have 80% of their assets in terms of home. For those who have hardly any income it is a real problem.
They even can't borrow on their homes, for they have literally no income to repay the loans monthly. Therefore, they go for reverse mortgages.
With a reverse mortgage they get a huge amount of money and have no need to make monthly payments. But the principal will remain unpaid and the interest will start to accumulate. The debt will be repaid only if the person dies or sells the home.
The reverse mortgage is a way to make a huge amount of cash and at the same time the person can hold the ownership of the home. Moreover, the worry of repayment lies in the distant future.
However, there is also a bad side of reverse mortgage. It can use up all the equity that people
have accumulated in their home over some or a long time. But one assurance is also there, that the reverse mortgage company will not foreclose regardless the debt amount.