Reverse Mortgage Questions

Common questions about reverse mortgages

A reverse mortgage is a great tool that provides Canadians with the retirement lifestyle that they want! Here are a few of the most common questions.

A reverse mortgage is a great tool that provides BC residents with the retirement lifestyle that they want! Here are a few of the most common questions.

A reverse mortgage is a great tool that provides BC residents with the retirement lifestyle that they want! Here are a few of the most common questions.

A reverse mortgage is a great tool that provides AB residents with the retirement lifestyle that they want! Here are a few of the most common questions.

A reverse mortgage is a great tool that provides ON residents with the retirement lifestyle that they want! Here are a few of the most common questions.

Question: Is it possible to lose my home?


Answer: No, you are the owner of your home. You will never be asked to move or sell as long as your property taxes and insurance are in good standing, you live your home and the property is kept in good condition.

Question: Do I have to make mortgage payments?


Answer: Nope! There are no payments required until you choose to move or sell your home. However, you do have the option to make advance interest payments to reduce the future principal.

Question: Is a reverse mortgage similar to a home equity line of credit (HELOC)?


Answer: No, with a HELOC you have to qualify for the loan based on income and credit. It’s better suited for those with short term borrowing needs and an ability to make monthly payments. A HELOC is also callable at the bank’s discretion. Reverse mortgage qualification does not rely on income/credit, is a lifetime product, and is not callable. It also does not require a mortgage payment.

Question: How much money can I borrow?


Answer: The maximum amount depends on the age of the youngest applicant, the value of your home, and the type/location of your property.

Question: Do I get the equity left in the home?


Answer: Yes, the home equity is all yours. In fact, over 99% of homeowners with reverse mortgages have money left over after the mortgage is repaid. On average, the amount left is more than 50% of the value of the home. Remember, the absolute maximum amount a bank will lend on this program is 55% of the appraised value of the property. Reverse mortgages are inherently conservative to protect all parties interests.

Question: What if I already have a mortgage?


Answer: That’s fine. Your reverse mortgage will pay out your traditional mortgage and any other secured debt. You’ll get the balance of the proceeds, payment and tax free.

Question: What about downsizing instead?


Answer: Downsizing is always an option depending on your goals. Make sure to factor in potential renovations, commissions, legal fees and land transfer taxes. Due to affordability, you’ll often have to move away from the neighbourhood you love in order to preserve some money to live. Reverse mortgages were designed to keep you in your community and take advantage of further appreciation of your home.

Question: Will any of my government benefits be impacted?


Answer: No, reverse mortgages do not affect any government benefits, such as Old Age Security (OAS), Canada Pension Plan (CPP), or Guaranteed Income Supplement (GIS).

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