Improving reverse mortgage products a good option for seniors

Reverse mortgages are growing in popularity as the quality of the products available improves. 

Better Dwelling, a news outlet covering the housing market, reports that reverse mortgage debt has spiked in Canada over the last couple of years, with Canadians owing around $4.3 billion in total to regulated financial institutions in 2020, compared with around $0.7 billion in 2010.  

I have to confess that I used to be leery of the concept, which allows seniors to borrow against the equity in their home for a loan with no mandatory payments. The loan doesn’t typically become due until the borrower’s death or the sale of their property. 

In the past, many of the products I saw were poor quality, with inflated interest rates that threatened to seriously whittle away at the value of the legacy borrowers would leave to their heirs.  

However, I have noticed that clients have become steadily more enthusiastic over the years, as the interest rates available on reverse mortgage products have become more reasonable. 

It’s a particularly good option for older individuals whose income is limited and are looking to access a loan without the commitment of regular payments.  

In these pandemic times, when many people find themselves consumed with financial and other worries about what the future will hold, a reverse mortgage also offers seniors an alternative source of funds if needed. 

Still, before entering into an agreement with a reverse mortgage provider, it’s important that you do your due diligence. That means seeking independent legal advice from an experienced lawyer who can pore over the multitude of documents associated with this kind of loan, and help you understand exactly what you’re getting into.