Retire on your terms with a reverse mortgage
Reverse Mortgages are designed specifically for Canadian homeowners aged 55 and older. A reverse mortgage is a loan that is secured against your primary residence that allows you to convert your home’s value into tax-free cash. This can allow you more freedom to retire on your terms.
You can stay in your home, without regular mortgage payments until you move or sell.
More and more Canadian seniors are choosing to stay in their homes for as long as possible. A reverse mortgage can increase cash flow which can be used for monthly expenses, paying out debts, covering medical expenses such as in-home care, buying a second property, or doing renovations and upkeep on the home. There is tremendous value in staying in the home you know and love. Therefore, a reverse mortgage can be the financial boost you need so you can live your retirement on your terms.
The goal of reverse mortgages is to allow older homeowners to tap into the equity they have built up in their homes for more cash flow. A reverse mortgage is designed to allow you to access up to 55% of the equity in the home.
Frequently Asked Questions
How do you get the money?
How you receive the funds is up to you and what you want them for. You can have the full amount as a lump sum or spread it into regular monthly deposits.
How do you pay it back?
A reverse mortgage loan does not need to be repaid for as long as you live in the home. When you decide to move or sell, the loan is repaid from the proceeds of the sale of the home. After the loan is repaid, all remaining money from the sale belongs to you and your estate.
How to qualify?
- Canadian Homeowner Aged 55 or Older (both spouses must be 55+)
- $250,000 Minimum Home Value
- Must be Your Primary Residence
Two financial institutions offer reverse mortgages in Canada. HomeEquity Bank offers the Canadian Home Income Plan (CHIP), which is available across Canada. Equitable Bank offers a reverse mortgage in some major urban centres of Ontario, Quebec, BC and Alberta.
Our brokers can walk you through the process and help you explore the best options for you.
Things to consider
There are a few things about reverse mortgages to keep in mind and discuss with your mortgage broker. First, you must live in the home for at least six months of the year and keep it in good order. You must remain current with your property tax payments with your municipality.
Second, reverse mortgages are based on your age, the location and type of home you have and your home’s current appraised value.
Third, because no payments are required until the mortgage is due, reverse mortgage rates tend to be higher than standard mortgages. The balance of the loan increases over time, consequently, so does the interest on the loan.
Reverse Mortgage Scenario
Key factors to qualify for a reverse mortgage are your age and the appraised value of your home. There are some calculators that are used to estimate the amount you might be eligible for which include your age and gender, property address, type of home and estimated appraised value.
A 55-year-old man lives in Central Alberta. He would like to make some renovations to his single-family home. A neighbour recently sold for $350,000 with a similar home. If appraised at $350,000 he would be eligible for $58,500. If his home is appraised at $500,000, he would be eligible for $82,500.
A 70- and 68-year-old couple lives in Lower Mainland, BC and would like to remain in their townhome for as long as they can. They would like to help their children with an early inheritance and increase their cashflow. If their townhome is appraised at $850,000, they would be eligible for $249,500 – $282,500. However, if their home is appraised at $1,000,000, they would be eligible for $293,500 – $331,500.
|Homeowner||Estimated Home Value||Location||Estimated Eligible Amount *|
|55 Man||$350,000||Central Alberta||$58,500|
|55 Man||$500,000||Central Alberta||$82,500|
|70 Man and 68 Woman||$850,000||Lower Mainland||$249,500 – $282,500|
|70 Man and 68 Woman||$1,000,000||Lower Mainland||$293,500 – $331,500|
*Based on CHIP Reverse Mortgage Calculator, July 2022
Is a reverse mortgage right for you?
If you think a reverse mortgage is the perfect solution for your situation, call us! A reverse mortgage can help you with immediate or long-term expenses so you can retire on your terms. As your mortgage professionals we strive to help you find the best solutions for home ownership and your financial goals.
Do not hesitate to call to discuss your options. We are always looking for ways to go above and beyond for our clients; offering ongoing strategies, programs and incentives to help ensure your financial success.