Key Takeaways:
- HomeEquity Bank and Equitable Bank are the only banks in Canada that offer reverse mortgages directly to homeowners over the age of 55
- If you visit your local branch at RBC, TD Canada Trust, CIBC, ScotiaBank or Bank of Montreal, you will be directed to a HomeEquity Bank representative
- RetireBetter can arrange a "CHIP Bundle" allowing you to get a reverse mortgage for up to 65% of your home's value
Introduction
The popularity of reverse mortgages in Canada has been on the rise, with a 35% growth in 2022 according to the Office of the Superintendent of Financial Institutions.
Online, many homeowners over the age of 55 are looking for information about reverse mortgages. We’ve been tracking this data and found that many people are searching to see if the main Canadian banks offer reverse mortgages.
In this article, we will review which of the Canadian banks offer reverse mortgages and why there is some possible confusion as to whether a bank offers (or doesn’t offer) reverse mortgages.
What is a Reverse Mortgage?
A reverse mortgage is a loan that allows homeowners who are at least 55 years old to convert part of their home equity into cash. Unlike a traditional mortgage, there are no monthly payments.
Homeowners can receive the funds as a lump sum, receive regular payments or use it as a line of credit.
The loan is repaid when the homeowner sells the house, moves out, or passes away.
For more detailed information on Canadian reverse mortgages, you can read articles written by our reverse mortgage experts: the benefits of reverse mortgages, how reverse mortgages work and how reverse mortgages differ from HELOCs.
Overall, reverse mortgages have several pros and some cons. On the positive side, they provide a steady income stream for homeowners, and there are no monthly payments. They are designed to provide seniors with a dignified retirement lifestyle.
However, the interest rates for reverse mortgages can be higher than traditional mortgage rates, and the loan amount is capped based on the value of the home and the age of the borrower. We’ve written a fair amount on this aspect of reverse mortgages. If you want more details, you can read more on the pros and cons of reverse mortgages in Canada.
Banks That Offer Reverse Mortgages in Canada
Does TD Bank Offer Reverse Mortgages?
- TD Bank, also known as TD Canada Trust, does not offer reverse mortgages in Canada.
Does RBC Offer Reverse Mortgages?
- RBC, also known as Royal Bank of Canada, does not offer reverse mortgages in Canada.
Does CIBC Offer Reverse Mortgages?
- CIBC, also known as Canadian Imperial Bank of Commerce, does not offer reverse mortgages in Canada.
Does Scotia Bank Offer Reverse Mortgages?
- Scotia Bank, also known as Bank of Nova Scotia, does not offer reverse mortgages in Canada.
Does the Bank of Montreal Offer Reverse Mortgages?
- Bank of Montreal, sometimes known as BMO, does not offer reverse mortgages in Canada.
Which Banks Offer Reverse Mortgages in Canada?
There are only 2 banks in Canada that currently offer reverse mortgages: HomeEquity Bank and Equitable Bank.
HomeEquity Bank has referral relationships with each of the major banks in Canada.
As a result, if you visit your branch and ask about getting a reverse mortgage, you will be directed to a HomeEquity Bank representative.
In return for this referral, HomeEquity Bank pays a commission to its bank partner.
According to our sources, these bank referrals account for 5% to 7% of HomeEquity Bank’s annual business.
Currently, Equitable Bank does not have referral relationships with any of the other major financial institutions in Canada.
As Equitable Bank continues to grow its share of the reverse mortgage market, we suspect they will negotiate their own referral arrangements with these banks, and likely replace HomeEquity Bank as the exclusive reverse mortgage partner.
Learn more:
CHIP Reverse Mortgage vs Equitable Bank Reverse Mortgage
Online Search Results for Canadian Reverse Mortgage Lenders
Online research can be confusing at the best of times and it might be somewhat surprising to think that your major bank does not offer reverse mortgages.
The referral relationship between HomeEquity Bank and the major banks can also lead to some confusion for retired homeowners looking for a reverse mortgage.
Here is a summary of online results that you might encounter:
RBC:
- An online search of “RBC reverse mortgage” provides general information about reverse mortgages and retirement planning, along with a link to CHIP reverse mortgages offered by HomeEquity Bank
- An online search of “RBC reverse mortgage calculator” provides information about RBC’s traditional mortgage and home equity lines of credit (HELOCs) calculators
TD Canada Trust:
- An online search of “TD reverse mortgage” provides general information about reverse mortgages and retirement planning, along with a link to CHIP reverse mortgages offered by HomeEquity Bank
- An online search of “TD reverse mortgage calculator” provides information about TD Bank’s traditional mortgage and HELOC calculators
ScotiaBank:
- An online search of “scotiabank reverse mortgage” only provides information about ScotiaBank’s home equity lines of credit; there is no mention of HomeEquity Bank
- An online search of “scotia reverse mortgage calculator” provides information about Scotiabank’s traditional mortgage and HELOC calculators
Bank of Montreal:
- An online search of “bank of montreal reverse mortgage” provides general information about HELOCs only
- An online search of “bank of montreal reverse mortgage calculator” provides information about Bank of Montreal’s traditional mortgage and HELOC calculators
CIBC:
- An online search of “CIBC reverse mortgage” provides general information about CIBC’s HELOC products and other home equity loan products
- An online search of “CIBC reverse mortgage calculator” provides information about CIBC’s traditional mortgage and home equity lines of credit calculators
Are There Other Reverse Mortgage Lenders?
Having only two options for reverse mortgages can sometimes be an issue for homeowners.
What can they do if neither HomeEquity Bank or Equitable Bank will give them the amount of money they need?
This is perhaps the biggest reason why you need to work with experienced advisors, because we have faced this issue many times before and have solutions.
At RetireBetter, we work with reverse mortgage lenders other than HomeEquity Bank and Equitable Bank.
These reverse mortgage lenders are smaller regional lenders that are not banks but are still professional and reputable lenders.
These smaller, niche lenders allow us to present more options for you than you would be able to get if you simply contacted the providers of the CHIP reverse mortgage or the Flex reverse mortgage.
You can benefit from these other reverse mortgage options because these lenders have different age restrictions and different risk tolerances.
The CHIP Bundle Option
With our partnerships, in situations where you are not able to get a CHIP reverse mortgage for the amount you need, we are able to combine the HomeEquity Bank reverse mortgage with another reverse mortgage.
We call this combination of two reverse mortgages a “CHIP Bundle” and it allows a homeowner to get access to more equity than they could get with just the CHIP reverse mortgage alone.
How much more can a homeowner access using a CHIP Bundle?
HomeEquity Bank allows us to bundle another reverse mortgage to access up to 65% of the property value.
Normally, a CHIP reverse mortgage would be limited to 55% to 59% of the property value and this would only be given if the borrower is very old.
You can only get a CHIP Bundle by contacting RetireBetter.
If you are dealing with HomeEquity Bank directly, their policies prohibit them from arranging a CHIP Bundle on your behalf—you must arrange it on your own by contacting us and asking us to initiate the process with HomeEquity Bank.
Equitable Bank does not currently offer bundles with its Flex reverse mortgage.
Where Can I Learn More About Reverse Mortgages?
RetireBetter has some of the most comprehensive materials about reverse mortgages in Canada.
You can also try out our unique RetireBetter reverse mortgage calculator which is free to use, does not require personal contact information and combines the results from both of the major reverse mortgage lenders, so you do not need to visit each site separately.
And of course, both HomeEquity Bank and Equitable Bank have impressive websites that focus on their own reverse mortgage products.
Just a word of caution if visiting other lender or mortgage brokers sites for information about reverse mortgages: you should be cautious about filling out forms asking for your personal contact information.
Many lenders and mortgage brokers who offer reverse mortgages will use the sites to collect your contact information for sales purposes.
At RetireBetter, we provide optional contact forms for visitors so they can decide to contact us when they feel comfortable.
Learn more:
Reverse Mortgages vs Home Equity Loans
Is It OK to Get a Reverse Mortgage from my Current Bank?
While there is nothing wrong with visiting your local branch to learn about reverse mortgages, we don’t recommend it.
Your local branch is not experienced in reverse mortgages and does not deal with them regularly, if at all.
You will simply be referred to a HomeEquity representative who will only give you information about CHIP reverse mortgages.
We recommend you deal with a reverse mortgage specialist at RetireBetter who can give you information about all of the reverse mortgage products, regardless of lenders and who also deals exclusively with reverse mortgages.
Summary
There are only 2 banks that actually provide reverse mortgages in Canada; HomeEquity Bank has partnerships with all of the major Canadian banks through their branch networks.
As a result, if you visit your local branch and ask for a reverse mortgage, your will be referred to a HomeEquity Bank representative and will be given information about a CHIP reverse mortgage.
If you're considering a reverse mortgage, contact RetireBetter rather than visiting your local bank branch.
Our experts can guide you through the process and help you understand your options. We also are able to offer reverse mortgage options from lenders other than HomeEquity Bank and Equitable Bank
FAQs:
Q. Do I need to change my bank if I get a reverse mortgage?
You do not need to change your regular bank if you get a reverse mortgage from either HomeEquity Bank or Equitable Bank. You can keep your accounts open with your existing bank.
Q: Is it better to use a mortgage broker when getting a reverse mortgage?
We think it’s always better to use a mortgage broker when getting any type of mortgage. If looking for a reverse mortgage, make sure to speak to an experienced licensed mortgage brokerage that is certified in reverse mortgages, similar to RetireBetter.
Q: Can I get a reverse mortgage if I have bad credit?
In order to be eligible for a reverse mortgage, your credit will not play a significant role. You can typically still be approved for all reverse mortgage loans.
You only need to show the ability to pay your property taxes and maintain the property.
