There is some confusion in Canada about how much you can actually borrow against your home with a Reverse Mortgage.
We have a short but informative article this week to clear the air.
Many of us have heard the commercials or seen ads online from Home Equity Bank about borrowing up to 55% of your home value with a Reverse Mortgage. The keywords here are “up to” 55%.
It’s true, you can mortgage your home for 55% BUT it depends on a variety of factors.
The bank takes into consideration your age, gender, home location, type of home, as well as appraised value.
The younger you are, the less you can borrow and the older you are, the more you can borrow.
The average loan amount issued in the form of Reverse Mortgages is between 30%-40%.
This is because the majority of Canadians are using Reverse Mortgages at a younger age.
If you are curious about how much you qualify for based on your age and home details, CLICK HERE and answer a few short questions and receive a free same-day estimate.
Why Is The Loan Amount Based On Age?
Age is one of the largest factors when the two Reverse Mortgage providers, Home Equity Bank and Equitable Bank, determine the maximum eligible loan amount.
The number one reason is that they don’t want to see younger retired persons rely solely on their home equity and erode their largest asset during the golden years.
This is why the loan amounts are smaller if you are closer to the age of 55 versus 75.
Secondly, the banks are lending their money and not asking for any principal or interest payments until you decide to move or sell.
They are willing to lend larger amounts to older individuals as the mortgage is likely to be repaid sooner than a younger retiree who plans to live in their home for another 20-30 years.
Lastly, mortgage lending practices in Canada are very conservative. Some may argue that our government policies are too restrictive, however, they are specially designed to protect our financial integrity as well as our citizens. Canada is known to have one of the safest banking systems in the world.
Remember, if you are considering a Reverse Mortgage but are not sure how much you may qualify for, please CLICK HERE for a free estimate.
We also welcome questions via phone at 1-877-464-1106 or emails to info@goatmortgages.ca .
