Victoria, BC -- (SBWIRE) -- 07/31/2014 -- ReverseMortgageGuide.ca, part of the ShangriLoan Ventures network, recently released information about important changes to the Canadian reverse mortgage guidelines. These changes make it easier for people to get these unique loans at a younger age than previously possible. It's also now possible to use a reverse mortgage to gain access to more of a house's equity.
When first hearing about reverse mortgages, many people think they are a wonderful option. They're aimed at senior citizens, and for this age group, they can seem like they have no downsides. This is because with a reverse mortgage, the lender pays the borrower but doesn't require any repayment until the house is sold. An elderly person can easily imagine taking the money and never having to pay it back, since it's fairly unlikely for someone of this age to sell their house. However, ReverseMortgageGuide.ca warns that there are both benefits and drawbacks to this sort of arrangement. They have put up an informational page titled Pros & Cons of a Reverse Mortgage to help clarify just what to look out for.
"The main drawback to a reverse mortgage is that it comes due when the house is sold," said Kam Brar of ShangriLoan Ventures, LTD. "If the house needs to be sold within the first three years, penalties often apply. For most, however, this drawback becomes most apparent if the home is passed on to heirs. The heirs will usually want to sell a house since it's very unusual to want to keep an old one as a spare, but they'll find that the expected return is reduced by the amount of the loan."
The recent changes make things easier for borrowers who get a reverse mortgage, but will also make it possible for even more of a house's sale value to be tied up in the repayment. It used to be that these mortgages were capped at 40 percent of a home's equity, but now, up to 50 percent of equity can be mortgaged. Another change is that Canadians no longer have to be 60 years old to get the loans. Now, the minimum age is 55. This is great for people who need to access a large amount of cash between ages 55 and 60, but also makes it a bit more likely that the house will be sold before the borrower passes away.
"As these issues show, there are some distinct factors that some may consider to be drawbacks. It's always important to learn all of the ins and outs of any loan product. We make it easier to do this with our Reverse Mortgage Guide for Canadians, which is a good place to find an overview of what makes a reverse mortgage unique." Brar said.
About ReverseMortgageGuide.ca and ShangriLoan Ventures, Ltd.
ReverseMortgageGuide.ca is part of the ShangriLoan Ventures network, which has been educating Canadian borrowers for over 4 years. ShangriLoan connects eligible prospective borrowers with licensed, local professionals who can help them in their respective region.