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2180 Steeles Avenue West,
Suite 204, Concord,
ON, L4K 2Z5

Phone:     905-761-7001
Toll Free: 1855-761-7001
Fax:          905-761-7005

Email: mortgageadvisor@rogers.com





29 March 2019

Equity release mortgages are getting more and more popular among baby boomers

There’s a new tendency at the market: baby boomers who are facing retirement chose to give up their equity getting reverse mortgages more often. As a result, the outstanding balance of debt from those mortgages has nearly tripled during the previous five years.

It’s important to understand how reverse mortgages work. They let retirees borrow against the equity on their property. It can be a lump sum or monthly payments. The repayment time comes in case of a home sale, moving to a retiring residence or death.

Although interest rates are slightly higher for this product, reverse mortgages are becoming more and more popular. The recent report by Better Dwelling says the annual pace of reverse mortgage credit growth is ten times higher than of a conventional mortgage debt.

Better Dwelling points to OSFI’s results, showing the outstanding balance of reverse mortgage debt reached $3.51 billion in January. While it’s 0.82% lower than in December, it’s still 30.44% higher than a year earlier. The number almost tripled during the previous five years.

“The balance of reverse mortgage debt remains relatively small but its growth pace is significant,” - noted Better Dwelling. “Even at the lower annual pace of growth, seniors will increase it by one more billion by the next year. However, with the overall debt amount in Canada, it’s a drop in the ocean.

This unique product is available for any homeowner over 55-60 years old who has paid off property or relatively small (compared to the value) mortgage left. Major feature of this product is the lack of regular mortgage payments, when homeowner can continue to live and his house without making any mortgage payments. Interest will accumulate until property is sold.

 

 

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