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Reverse Mortgage

I’m 55 or older and want to access the equity in my home and improve my cash-flow.

Wouldn’t it be nice if you had the money to do more of the things you want to do?  A reverse mortgage could be just what you need.  It’s a simple and sensible way to unlock the value in your home and turn it into cash to help you enjoy your life on your terms.  

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Topics we’ll discuss include:

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  • You can choose how you want to receive your money:  you can take a lump sum advance, or choose to receive monthly advances or choose a combination of the two.

  • You receive the money tax-free.

  • You can use the money any way you wish.

  • No regular mortgage payments are required while you or your spouse live in your home. 

  • You maintain ownership and control of your home.

  • You keep all the remaining equity in your home.

  • Will I ever owe more than the home is worth?

  • Will the bank own my home?

  • What if I have an existing mortgage?

  • What fees are associated with a reverse mortgage?

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What do I qualify for on a reverse mortgage? 

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The Reverse Mortgage Market Today

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Canadians aged 55+ are living longer and want to stay in the homes they love, but they need the financial peace of mind to do it—which is why the reverse mortgage continues to gain popularity. If you’re looking to improve cash flow, pay off an existing mortgage, clear balances on existing credit cards and loans, make home improvements, or gift a down payment to a loved one, a reverse mortgage might be the right solution for you. We can help!

 

What Is A Reverse Mortgage?

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A reverse mortgage is a simple way to turn a portion of your hard-earned home equity into tax-free cash—with no ongoing payments required.

 

  • Borrow up to 59% of your home’s value

  • No monthly mortgage payments required

  • Receive your tax-free funds as a lump sum or over time

  • Retain ownership of the home you love
     

A reverse mortgage turns your home equity into cash that can be used any way you like. 

 

Reasons To Consider A Reverse Mortgage

 

If you’d like to boost your retirement income, a reverse mortgage allows you to access up to 59% of your home’s equity in tax-free cash. 
 

You can take your reverse mortgage cash as either a one-time lump sum payment, as monthly payouts, or as ad hoc advances when you need them. 

 

Some of the more popular reasons for taking on a reverse mortgage include:

 

  • Paying off existing debts like a traditional mortgage 

  • Gifting money to family

  • Improving your quality of life

  • Adding safety features to or renovating your home

  • Buying an investment or vacation property

  • Paying for health care or in-home care 
     

Remember, you can also pay off your existing traditional mortgage to eliminate payments and increase cash flow—the options are endless!

 

Benefits Of A Reverse Mortgage

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The benefits of a reverse mortgage don’t just stop at the ability to cash in on your home’s equity! In fact, these benefits also include:

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  • Title and ownership of property remain in homeowner’s name

  • No monthly mortgage payments required 

  • Prepayment penalties waived in the event of death or care home placement

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Reverse Mortgage Misconceptions

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“With a reverse mortgage, you no longer own your home.”
 

FALSE. You always maintain title, ownership, and control of your home, as long you continue to meet your mortgage obligations (i.e., paying property taxes and maintaining the home). The reverse mortgage lender simply has a first mortgage on the title, in the same way as a traditional mortgage. 

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“You’ll owe more than the value of your home.”

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FALSE. It is federally mandated that all reverse mortgages come with a “no negative equity guarantee.” As long as you meet the required mortgage obligations, the amount you owe on the due date will not exceed the fair market value of your home.

 

“Reverse mortgages are expensive.”

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FALSE. An appraisal of your property and independent legal advice is required for a reverse mortgage. Additional fees include a closing and administration fee. When compared to alternatives like downsizing or moving to another home, a reverse mortgage can be an affordable option.

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“Reverse mortgages have higher interest rates.”

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DEPENDS. While interest rates are typically higher than a traditional mortgage, it’s important to remember that for many retired Canadians, monthly mortgage payments are difficult to afford. Plus, many struggle to even qualify for a traditional mortgage. For these reasons, many retired Canadians choose a reverse mortgage over traditional solutions. 

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“You can’t pass on your home.”

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FALSE. Your heirs will always have the option to keep the property by paying off your reverse mortgage after you pass away. In addition, with the “no negative equity guarantee,” your heirs will never owe more than the fair market value of the home, as long as all mortgage obligations were maintained.

 

Where To Get A Reverse Mortgage in Canada

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There are two Canadian Schedule I banks that offer reverse mortgages. Both banks’ reverse mortgage products are similar in their design and function. Let us help you find the right solution today. 

 

Are You Eligible For A Reverse Mortgage?


Thousands of Canadian homeowners are already enjoying the benefits of a reverse mortgage.

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To be eligible, you must be:

  • A homeowner

  • Aged 55+

  • Live in your home for at least 6 months of the year

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If there are other individuals listed on your home’s title, they must be at least 55 years old.  Individual lenders will have other specific requirements—talk to us about the solutions available to you! 

 

Reverse Mortgage Fees

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The fees associated with a reverse mortgage can vary depending on your lender. Typically, a lender will charge a one-time set-up fee (usually deducted from the initial advance). 

 

Also, similar to a regular mortgage, there will be additional appraisal (paid to an external property appraiser) and legal fees for closing costs or independent legal advice.

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Reverse Mortgage Due Dates

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Your reverse mortgage due date is established when the earliest of any of these events occurs:

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  • Sale or transfer of the property

  • The last borrower moves into a long-term care or retirement residence

  • The last borrower passes away

  • Default (such as not maintaining the home and property taxes)

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Receiving The Proceeds From Your Reverse Mortgage 

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Depending on your individual circumstances and the lender you choose, the following funding options are typically available: 
 

  • Initial advance / lump-sum 

  • Ad-hoc advances 

  • Recurring / scheduled advances (i.e., monthly, quarterly) 

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Unlike traditional mortgages, no regular payments are required until the reverse mortgage becomes due. However, provided that certain conditions are met, you typically have the option of prepaying some of your principal or interest. Lenders in Canada offer reverse mortgages with distinct prepayment charges. Contact us to learn more!

 

Things To Consider

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Before getting a reverse mortgage, here are some questions to consider asking us:

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  • How can I receive the funds from a reverse mortgage?

  • What fees are involved?

  • What interest rate will I have to pay on the money I borrow?

  • Can I pay the loan early without incurring prepayment charges?

  • If I were to sell my home, would I be subject to any penalties?

  • If I were to move out of my principal residence, when would I have to pay off the loan balance?

  • If I pass away, how much time will my estate have to pay off the loan balance?

  • What happens if it takes my estate longer than the stated period to fully repay the loan?

  • When it’s time to pay back the loan, what happens if the amount of the loan is higher than my home’s value? 

 

Let us help you today! 

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