Articles and Blogs

December 20^th 2021 - Philip Roe

Retirement continues to be a point of concern for all of Canada. Despite having one of the best retirement programs in the world, more and more Canadians are finding themselves without the necessary funding for retirement. Understanding which lenders offer reverse mortgages is an important starting point.

While Canadian banks are the most traditional lenders when it comes to mortgages, they do not offer reverse mortgages. Understanding who does offer them and what they can do for you is an important first step to take.

Who Offers Reverse Mortgages in Canada?

Right now, there are only two companies in Canada that offer reverse mortgages: Equitable Bank and HomeEquity Bank. The latter offers their Canadian Home Income Plan (CHIP), which is available all throughout Canada.

When working with HomeEquity, you can either get your reverse mortgage directly through them or through mortgage brokers that work with them. Equitable Bank, meanwhile, offers reverse mortgages through some of the major urban centers throughout the country.

Speak with a Financial Advisor First

The best move that anyone considering a reverse mortgage could do is to talk to a financial advisor. Understand the pros and cons of reverse mortgages and decide if it is the best move for your family. One of the major missteps from borrowers is that they are either uninformed or misinformed about mortgage products.

You can talk to either of the institutions that offers reverse mortgages but there will always be the question of transparency. By speaking with a financial advisor, a deeper understanding can be achieved. That advisor can review your finances and determine if a reverse mortgage is indeed the right move.

Why Don’t Banks Offer Reverse Mortgages?

For a time, Canadian banks did offer reverse mortgages. But they have fallen out of favor with traditional lenders in recent years. This is due in part to the fact that, for the duration of the loan, there are no fees or payments collected.

Yes, payment will come due at the end of the term, but that can be longer than financial institutions and banks are comfortable with. So, Canada is currently in a position where only two institutions – HomeEquity and Equitable Bank – even offer them.

What Institutions Offer Reverse Mortgages and the Future of this Loan

There are some lingering questions about the future of reverse mortgages. Who will offer them, what place they will hold among Canadian borrowers, and so on. Most advisors treat reverse mortgages as a last resort type of loan.

The idea being that the more equity left in the home when the owners sell or pass it on as inheritance, the better. For old Canadians that have no children, reverse mortgages make all the sense in the world. Borrowing against your home, without the need to sell, can make all the difference in the world for those looking to avoid a sale.

Even better, the income from a reverse mortgage is completely tax-free and can be used for any purpose. So long as the mortgage on the home has been paid off, borrowers are free to do what they please with the funds. Implement renovations, pay off debt or medical bills, and anything that they may have in mind can be done with the funds from a reverse mortgage.

So long as Canadians of retirement age have a need for immediate cash, reverse mortgages will exist. While there may be potentially better options, it depends entirely on each unique situation. Talk to a financial advisor first to get a better idea of how a reverse mortgage would work for you.

Who Do I Talk to About Being Able to Qualify for a Reverse Mortgage?

The first thing that you should do if you want to discuss a reverse mortgage is call Lotus Income. We are here to get you the most equity out of your home and put the most money into your pockets.

Reverse mortgages can seem like a complicated endeavor, so it is important to discuss all of your options first. We can run through the pros and cons of reverse mortgages and determine if it is the right fit for your needs.

For Canadians at or nearing retirement, getting the funds necessary to live life comfortably is important. Even if retirement savings have been compromised, there are options available to you. Call Lotus Income today.