With an aging Canadian population and the baby boomers having suffered several financial setbacks over their life span, as recently as 2008, reverse mortgages are becoming more popular every year. Home Equity Bank, a Canadian Schedule 1 bank, has some of the best products available to Canadians over 55 who have a lot of equity in their homes.
Advantages of Reverse Mortgages
These products are available to free up the equity and at the same time do one of several things for the client. Reverse mortgages can fee up to 50% of the value of a property, the money is yours to be used as you see fit and over the length of the mortgage you pay not monthly payments. This has helped many Canadians have a better retirement and alleviate debt and worry about meeting a bank payment.
It will allow Canadians to avoid having a heloc which would require monthly payments to be made to a regular bank. With a reverse mortgage a surviving spouse will still be able to stay in the home as long as she or he might want to be there. The home becomes part of the estate and Home Equity bank holds the mortgage until such time as the home is sold or they are deceased.
Disadvantages of Reverse Mortgages
In many cases people look at reverse mortgages as a negative process, what happens during the time the mortgage is in place is that Home Equity Bank charges interest on the money borrowed instead of collecting the interest monthly it is accrued against the value of the home. This is why you will only find reverse mortgages going up to 50% of the value of the home. This leaves plenty of room should the mortgage go on for 10 or 15 years. At the end of the mortgage the house is sold and interest and principal is collected by the bank from the sale. Many would think this erodes the values of the property but it is a simpler way for people to get equity out without causing them to dilute their savings nest egg.
With Canadians living longer and wanting to stay in their own home reverse mortgages are becoming more and more desirable every day.