New reverse mortgage guidelines make it possible for younger Canadians to get loans and to access more of their homes' equity, reports ShangriLoan Ventures
Victoria, BC -- (SBWIRE) -- 07/31/2014 -- ShangriLoan Ventures, Ltd. has announced the arrival of important changes in reverse mortgage terms and availability for residents of Canada. These changes make the loans more useful as well as expanding their availability to a larger number of residents. Reverse mortgages, unlike home equity lines of credit, are intended to provide homeowners with loans that don't need to be paid back at a set time. Instead, they are only paid when the house is sold.
"One of the most exciting changes is that reverse mortgages are now available to people as young as 55," said Kam Brar of ShangriLoan Ventures. "These loans used to have a minimum age requirement of 60, so the change lets many more people obtain them. Another change is that the loans can now provide up to 50 percent of the home's equity to the borrower, when before, it was just 40 percent."
While the relaxed requirements are exciting, one of the most exciting things is simply the way reverse mortgages work. They originally got this name because instead of the borrower sending the lender monthly payments, the lender sent payments to the buyer. Now, however, there are many ways to get the proceeds of such loans. They can still be sent as monthly payments, which makes daily life easier for people who need to know that their ongoing needs will be covered, but they can also be paid out as a lump sum. Lines of credit and combinations of loan payout methods are also possible at some lenders.
"The only catch is that the loan must be paid off if the house is sold. If someone holds onto their house until they die, that will mean that there will be less value in the estate. However, it still makes sense for many elderly people to go ahead and get a reverse mortgage. Thanks to the equity value cap, 50 percent of the home's value is preserved, and the ongoing payments from the lender can make the difference between poverty and an acceptable quality of life," Brar said.
That payoff requirement is one of the reasons that these loans are restricted to senior citizens. Younger people are more likely to sell their houses and then face hardship when the loan amount has to be paid all at once. A senior citizen, on the other hand, may face no drawbacks at all.
"It's very important for would-be borrowers to know exactly what they're getting into before signing any papers. This prevents bad financial surprises down the line. For this reason, we've put together a guide with reverse mortgage information for Canadians. We'll mail it to anyone who enters a name, address, and phone number into the form on our site at ReverseMortgageGuide.ca," Brar said."
About 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.