FAQs for Reverse Mortgages

Frequently Asked Questions about Reverse Mortgages in Canada

Reverse mortgages came to Canada in 1986, but they have been around in the USA since 1961, when a loan officer in Maine realized a way to help a widow stay in her home after the loss of her husband's income.

In the USA, reverse mortgages have changed a lot since the 1960s.

But in Canada, reverse mortgages are still very conservative, and designed to protect both the homeowner and the equity in the home.

Only Canada's most highly-regulated banks provide reverse mortgages.  These banks are commonly known as "Schedule 1 Banks," the same bank category as RBC, Bank of Montreal, CIBC, TD, Scotiabank, and National Bank of Canada.  

A reverse mortgage in Canada is one of the safest mortgage types available.

Proceeds are tax-free with no impact on working or pension income. A reverse mortgage in Canada has a maximum loan amount of 55% of the value of the property. This is a conservative approach that ensures borrowers will have equity remaining in their property when they pay off the reverse mortgage.

Read on to learn how reverse mortgages can help you live a better life.

Myths and Facts about Reverse Mortgages in Canada

What is a reverse mortgage in Canada?

Won't the bank own the home?

How come some homeowners end up with MORE equity after a reverse mortgage?

Aren't the interest rates for reverse mortgages high? 

Will I ever be forced out of my home because of a reverse mortgage?

What happens if my home decreases in value?

Does the homeowner have to make payments?

How does a reverse mortgage work?

Who can get a reverse mortgage?

Will a reverse mortgage affect my Canadian government benefits?

How long does the reverse mortgage last?

How is a reverse mortgage repaid?

What are the homeowner's obligations?

If I die, will my surviving spouse be stuck with paying back the reverse mortgage?

How much money can the homeowner get?

What determines how much money the homeowner gets?

What can I do with the mortgage funds, the cash?

What if the homeowner already has an existing mortgage?

Can I end up owing more than the home is worth?

What happens if my home increases in value?

How does the homeowner receive the money?

What are the fees with a reverse mortgage?

Is a reverse mortgage a loan of last resort?

Is downsizing better than getting a reverse mortgage?

How is a reverse mortgage different from a home equity line of credit (HELOC)?

What are the alternatives to a reverse mortgage in Canada?

Is a reverse mortgage a "demand loan"?