Process

1. Bank/Lender Set-Up and Loan Administration

• Banks/lenders in Canada charge a one-time fee of approximately $1795 to setup and administer a reverse mortgage.

2. Home Appraisal

• Approximately $175–$400 for most properties. This is the only out-of-pocket expense for the homeowner.

3. Independent Legal Advice

• Approximately $300 - $600 for most cases.

4. Property Taxes

• Must be either up-to-date, or brought up-to-date out of the mortgage proceeds.

What Are Subsequent Advances?

Often the bank makes more money available to the homeowners than they want. Homeowners can request these extra funds at any time. These requests for extra funds are called "subsequent advances."

Homeowners with either reverse mortgage type (Lump Sum -or- Equity Pension) can receive their funds in subsequent advances.

Homeowners will have access to subsequent advances in two scenarios:

1.  If the homeowners choose not to receive all the money available to them (that they qualify for) in a lump sum; or

2. Their home rises in value and the bank offers them more money.

Receiving subsequent advances requires no modification to the reverse mortgage agreement, and no regular payments.

Minimum Amount

The minimum amount for a subsequent advance is $5000.

Fee For Each Subsequent Advance

Each subsequent advance has a $50 processing fee, paid to the bank/lender.

Interest Rate On Subsequent Advances

1. For homeowners with a variable interest rate, interest will accrue on your subsequent advance at the current interest rate for your reverse mortgage.

2. For homeowners with a fixed interest rate, interest will accrue on your subsequent advance at a weighted average for the remainder of your current reverse mortgage term (duration). This is done when there is a difference between your interest rate and the bank's current posted rate.

Paying OFF the Reverse Mortgage WITHIN The First 3 Years

Within the first 3 years of getting your reverse mortgage, and in certain scenarios, you can pay it off completely according to the following table:

Paying OFF the Reverse Mortgage AFTER 3 Years

After 3 years of getting your reverse mortgage, you can pay it off completely by paying 3 months' interest on the amount you pay back.

For example, let's say you have a reverse mortgage with a 5-year term (which locks in the interest rate for 5 years), and then after 5 years you decide to renew the mortgage for another 5-year term. Then, in the sixth year, you decide you want to break the mortgage and pay it off completely. In this scenario, you would pay 3 months' interest.

After 5 years and in certain scenarios, you can pay it off completely according to the following table:

Paying DOWN The Reverse Mortgage

There are two options to pay down a reverse mortgage in Canada without paying any prepayment charge:

1. Once per year, within 30 days of your reverse mortgage anniversary date, you can pay down 10% of the amount owing without any prepayment charges.

2. Homeowners with a Lump Sum Reverse Mortgage have the option of setting up regular interest payments, of a fixed amount, by automatic withdrawal.

3. Homeowners have the option of combining options one and two.

If you refinance your reverse mortgage on a new property, the lenders will waive the fees. A reverse mortgage is not portable in the traditional sense. This is because reverse mortgage lenders focus on the specific property (the home) and its value, and focus far less on the borrower's income. With conventional mortgages, on the other hand, the lender requires the borrowers to have strong incomes and excellent credit histories. With a reverse mortgage, this is not a requirement.