fbpx

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"?