Straight Talk On Reverse Mortgages : Q&A With Expert Rahul Saggu
Internationally quoted, Rahul Saggu has a reputation as the Go-To Guy when you really need someone you trust to answer financial questions. This Canadian up and comer in the finance industry is also the feature of an important upcoming AUTHORITY magazine article, “Investing During The Pandemic; What Should I Do With My Money Considering All of the Volatility and Uncertainty Today.”
Recently MEDIUM had the chance to sit down with Rahul, and we took the opportunity to ask him about something a lot of our readers have questions about : Reverse mortgages. What the heck is a reverse mortgage, is it beneficial, who is it for, should you be looking into it? Here’s what we learned.
MEDIUM : A lot of people have heard the term Reverse mortgage, and they may have heard a little about it either positive or negative. Can you give our readers a better idea of what they’re hearing about? What actually is a reverse mortgage?
RAHUL SAGGU: A reverse mortgage is a loan that allows you to access equity from your primary home without having to sell your home. This type of loan is designed exclusively for homeowners aged 55 and over. The funds from a
reverse mortgage can be used for any purpose — renovations, pay off any debt, and even travel! This unique program has helped many seniors live life with more abundance allowing them to enjoy the equity they’ve built up over the years. A benefit of this program is that there are no monthly mortgage payments required. Repayment of the loan is only required once you decide to sell. Many banks guarantee that the amount you eventually repay will never exceed the fair market value of your home. If your home appreciates in value
from the time of the loan, the appreciation is all yours. You are only required to maintain your expenses on the property such as property tax and insurance.
MEDIUM : Can you break it down for us a little more?
RAHUL SAGGU : A reverse mortgage works by offering a safe solution for Canadian homeowners over 55 years old to access their home equity without the requirement of monthly mortgage payments. Unlike a traditional mortgage, you will not need to make any principal or interest payments until you and your spouse leave the home. The maximum equity you can access from your property is 55% minus your mortgage. The equity pulled out of
your home is also tax free! At VINE Group we have built up excellent relationships with our lenders to ensure a smooth process and the best rate.
MEDIUM : So basically a reverse mortage allows you to access up to 55% of your home equity without having to make monthly mortgage payments. Are there other benefits?
RAHUL SAGGU : It also allows you to leverage your most valuable asset, and there are no restrictions on how you spend the money you receive. It helps you avoid pulling money out of RRSP’s or other investments, which could help you save on taxes. You can choose to receive a cash lump sum, a series of monthly advances, or both.”
MEDIUM : Are there any negatives that people should be aware of?
RAHUL SAGGU : The fees and interest rates are typically slightly higher than with a traditional mortgage. However the interest rate for a reverse mortgage is not usually as high as an unsecured line of credit, personal loan, second mortgage, or credit card. If you do choose to repay the mortgage in the first 5 years, you’ll have to pay an early repayment charge -and also you may not be able to borrow more money against your home in the future.
MEDIUM : Would you say it’s better for people to look at downsizing than reverse mortgages ?
RAHUL SAGGU : While downsizing may work for some, it can cost tens of thousands of dollars in realtor fees, land transfer tax and legal fees. It also comes with the hassle of moving. The emotional and financial costs often make this option less appealing.
MEDIUM : Who qualifies for a reverse mortgage?
RAHUL SAGGU : In Canada, where I work, to to be considered eligible for a reverse mortgage in Canada, you must be a Canadian homeowner age 55 or older, and if you have a spouse, both of you must be at lease 55 years old to be eligible. They also assess your age, location of your home, the kind of home it is, the appraised value of the home, the condition of the home and the equity inside the home.
MEDIUM : Thanks so much for explaining all this to us! Where can readers find you online?
RAHUL : At the Vine Group or on my personal website www.rahulsaggu.ca
