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Understanding a Canada Reverse Mortgage
A Canada Reverse Mortgage is like most other mortgages with two main exceptions: one, it
is only available to seniors aged 55 years or older and two, there are no monthly repayments
required to pay back the mortgage. The most significant feature of a reverse mortgage is that
a senior may have one for 5, 10, 15 or even 25 years or more in time and never be required to
make a monthly mortgage payment. Instead the balance slowly accrues over time ... while at the
same time the house value (hopefully) continues to rise also. Historically, house prices typically
increase. This process ensures equity in the home over the long term.
Regardless of market fluctuations, the providers of Reverse Mortgages in Canada (the Canadian
Home Income Plan) guarantee, no matter what, that the loan balance will not exceed the fair
market value of the home. In other words you can never owe the lender more than the value of
the home. This is a big guarantee. In practice the lender hasn’t had to worry too much about any
potential losses because they only lend up to a maximum of 50% of the house value. And while
they know that yes, the mortgage balance will grow over time, they also know that the total
house value will continually grow over time as well.
At the start of the mortgage the equity in the home is always at least 150% more than the
loan they put out. It makes ‘getting a reverse mortgage’ a great option for a senior to take out
equity while not needing to be concerned about their debt ever exceeding their home value. But
because ‘time’ is a factor there is an age eligibility criteria of being 55 years or older. Even at
55 it is possible that a Canada reverse mortgage may be around for 30 years! Just imagine, some
lender has agreed to lend money, without any expectation of an ongoing monthly repayment, and
they may not get paid back their monies lent until 20 or 30 years later. And the loan is not based
on your health or your income or even your credit rating. It is a home equity lending program
that is designed only for seniors that allows them the ability to borrow based on equity only. If
they are the right age and the house is in reasonable shape then they will get a reverse mortgage.
In the meantime they get to enjoy that money and use it any way they wish.
So here are some main features of a Canada Reverse Mortgage:
• You and your spouse must both be at least 55 years old or older. This age qualification is in
stone and cannot be changed.
• The amount of loan that you get varies depending on your age, the house value and the location
of your home. If it is in a well-populated area you will get more; in a more rural setting you will
get less
• If you should wish to proceed, any costs associated in obtaining the reverse mortgage can come
out of the mortgage proceeds at funding. You do not have to pay any costs up front.
• You can get pre-approved for the maximum amount initially, but only have a smaller amount
advanced. Then, later all you have to do is call the lender for more money at any time. You only
pay for the amount you take ... not the amount that you get approved for. All money that you
receive for a reverse mortgage Canada loan is tax-free. Also, any proceeds do NOT affect any
Old Age Security or Guaranteed Income Supplement government benefits you may already be
receiving.
• You make absolutely NO monthly repayments while you or your spouse live in your home.
This is such a big deal I am going to mention it again. With any other mortgage product you
would have to make monthly payment. With a reverse mortgage in Canada you do not have to
make any mortgage payments. This allows a senior to create more income by either purchasing
an income with an insured annuity or a securities product. This can also occur by paying off
other debt obligations and the money ‘saved’ by not making payments can be used to live and
enjoy life better.
• You still get to keep the house in your name; you are still on title (just like you would with any
other mortgage). When you move or sell the home then the debt is repaid. You even have the
option to ‘transfer’ your reverse mortgage to a new property.
• You keep all the equity that is left in your home. 99% of all homeowners have equity in their
home when the reverse mortgage loan is repaid. In fact, on average over 50% of the house value
is still equity by the time that the reverse mortgage is repaid. So the kids will be just fine. And
there are other ways to keep the home for the kids at the time when the reverse mortgage needs
to be repaid (when both parents are deceased for example). The children can simply obtain a
normal mortgage to pay out the reverse mortgage at that time. Remember there will be equity in
the home.
• Your estate is well protected. The lender guarantees that your heirs will never owe more that
the home value.
• Save on Taxes! You can use a reverse mortgage to take cash out of the home and put it into
investments. All the interest charged on the loan is then tax deductible.
For more information, contact the seniors’ lending team at Home n Work Mortgages Inc.
www.seniorslendingcentre.comUnderstanding a Canada Reverse Mortgage
A Canada Reverse Mortgage is like most other mortgages with two main exceptions: one, it
is only available to seniors aged 55 years or older and two, there are no monthly repayments
required to pay back the mortgage. The most significant feature of a reverse mortgage is that
a senior may have one for 5, 10, 15 or even 25 years or more in time and never be required to
make a monthly mortgage payment. Instead the balance slowly accrues over time ... while at the
same time the house value (hopefully) continues to rise also. Historically, house prices typically
increase. This process ensures equity in the home over the long term.
Regardless of market fluctuations, the providers of Reverse Mortgages in Canada (the Canadian
Home Income Plan) guarantee, no matter what, that the loan balance will not exceed the fair
market value of the home. In other words you can never owe the lender more than the value of
the home. This is a big guarantee. In practice the lender hasn’t had to worry too much about any
potential losses because they only lend up to a maximum of 50% of the house value. And while
they know that yes, the mortgage balance will grow over time, they also know that the total
house value will continually grow over time as well.
At the start of the mortgage the equity in the home is always at least 150% more than the
loan they put out. It makes ‘getting a reverse mortgage’ a great option for a senior to take out
equity while not needing to be concerned about their debt ever exceeding their home value. But
because ‘time’ is a factor there is an age eligibility criteria of being 55 years or older. Even at
55 it is possible that a Canada reverse mortgage may be around for 30 years! Just imagine, some
lender has agreed to lend money, without any expectation of an ongoing monthly repayment, and
they may not get paid back their monies lent until 20 or 30 years later. And the loan is not based
on your health or your income or even your credit rating. It is a home equity lending program
that is designed only for seniors that allows them the ability to borrow based on equity only. If
they are the right age and the house is in reasonable shape then they will get a reverse mortgage.
In the meantime they get to enjoy that money and use it any way they wish.
So here are some main features of a Canada Reverse Mortgage:
• You and your spouse must both be at least 55 years old or older. This age qualification is in
stone and cannot be changed.
• The amount of loan that you get varies depending on your age, the house value and the location
of your home. If it is in a well-populated area you will get more; in a more rural setting you will
get less
• If you should wish to proceed, any costs associated in obtaining the reverse mortgage can come
out of the mortgage proceeds at funding. You do not have to pay any costs up front.
• You can get pre-approved for the maximum amount initially, but only have a smaller amount
advanced. Then, later all you have to do is call the lender for more money at any time. You only
pay for the amount you take ... not the amount that you get approved for. All money that you
receive for a reverse mortgage Canada loan is tax-free. Also, any proceeds do NOT affect any
Old Age Security or Guaranteed Income Supplement government benefits you may already be
receiving.
• You make absolutely NO monthly repayments while you or your spouse live in your home.
This is such a big deal I am going to mention it again. With any other mortgage product you
would have to make monthly payment. With a reverse mortgage in Canada you do not have to
make any mortgage payments. This allows a senior to create more income by either purchasing
an income with an insured annuity or a securities product. This can also occur by paying off
other debt obligations and the money ‘saved’ by not making payments can be used to live and
enjoy life better.
• You still get to keep the house in your name; you are still on title (just like you would with any
other mortgage). When you move or sell the home then the debt is repaid. You even have the
option to ‘transfer’ your reverse mortgage to a new property.
• You keep all the equity that is left in your home. 99% of all homeowners have equity in their
home when the reverse mortgage loan is repaid. In fact, on average over 50% of the house value
is still equity by the time that the reverse mortgage is repaid. So the kids will be just fine. And
there are other ways to keep the home for the kids at the time when the reverse mortgage needs
to be repaid (when both parents are deceased for example). The children can simply obtain a
normal mortgage to pay out the reverse mortgage at that time. Remember there will be equity in
the home.
• Your estate is well protected. The lender guarantees that your heirs will never owe more that
the home value.
• Save on Taxes! You can use a reverse mortgage to take cash out of the home and put it into
investments. All the interest charged on the loan is then tax deductible.
For more information, contact the seniors’ lending team at Home n Work Mortgages Inc.
www.seniorslendingcentre.com
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