Reverse Mortgage Myths

Myths & Facts about reverse mortgages

There are lots of misconceptions about reverse mortgages. With an aging demographic in Canada, this type of mortgage has evolved as both a needs-based product as well as a tool for those looking to preserve retirement savings and investments. Here are some common myths and facts.

There are lots of misconceptions about reverse mortgages. With an aging demographic in BC, this type of mortgage has evolved as both a needs-based product as well as a tool for those looking to preserve retirement savings and investments. Here are some common myths and facts.

There are lots of misconceptions about reverse mortgages. With an aging demographic in BC, this type of mortgage has evolved as both a needs-based product as well as a tool for those looking to preserve retirement savings and investments. Here are some common myths and facts.

There are lots of misconceptions about reverse mortgages. With an aging demographic in AB, this type of mortgage has evolved as both a needs-based product as well as a tool for those looking to preserve retirement savings and investments. Here are some common myths and facts.

There are lots of misconceptions about reverse mortgages. With an aging demographic in ON, this type of mortgage has evolved as both a needs-based product as well as a tool for those looking to preserve retirement savings and investments. Here are some common myths and facts.

Myth: You can not get a reverse mortgage if you already have a traditional mortgage


Fact: As long as you don’t exceed the maximum Loan-To-Value (LTV) permitted through the reverse mortgage program, we will pay out your existing mortgage/debts from the proceeds of the reverse mortgage.

Myth: Reverse mortgages are a solution of last resort


Fact: Many financial professionals condone them because they provide financial flexibility and protect other investments. Retirement savings go further because reverse mortgages provide tax-free money.

Myth: You will owe more than your home is worth


Fact: The maximum you can borrow is 55% of the equity in your home. Reverse mortgages are designed to be conservative to protect you, your equity, your estate and the bank.

Myth: Reverse mortgage rates are too high


Fact: The rates you’ll pay are nominally higher than regular mortgage rates as it is a different product requiring no income qualification and no payments to be made.

Myth: The bank owns your home


Fact: You will always retain title, ownership and control of your home and can decide what to do with the property (i.e., sell, renovate, etc.)

Myth: A Home Equity Line of Credit (HELOC) is better


Fact: HELOCs are a great option for those with short term borrowing needs and the ability to pay the monthly interest payments. However, they are callable products, meaning the bank can demand the loan be repaid at any point in time. Similarly, they are not guaranteed on renewal. Conversely, reverse mortgages are long term products that will not be called in the event of property depreciation or rising interest rates. Moreover, the tax-free distribution and no payment feature enables you to prolong other retirement savings.

Myth: Surviving spouses are stuck paying the loan


Fact: Surviving spouses have the option to stay in the home without any mortgage payments until such a time if/when they decide to sell the property.

Myth: You can be forced to sell or foreclose at any point at the bank’s discretion


Fact: Reverse mortgages are lifetime products. As long as you pay the property taxes and home insurance, live in the home, and keep the property in good condition the property remains in good condition, your loan won’t be called even if the property value drops. Accordingly, you can stay in your home indefinitely.

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