FAQ

Frequently asked questions about Reverse Mortgages

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What is the best age to get a reverse mortgage in Canada?

The best age to get a reverse mortgage in Canada is between 55-60 if you are retired with a mortgage or a struggling to live comfortably with your retirement savings.

If you are mortgage-free or have no immediate needs for additional funds, then you should wait until you are between 70-75 to get a reverse mortgage.

You can learn more by reading our blog article where we looked at reverse mortgage approvals broken down by age and identified the best ages to get a reverse mortgage.

Can I use a reverse mortgage to buy a new home?

Yes, you can use a reverse mortgage to buy a home that you plan to live in.

This is most commonly done when people are downsizing from their home to purchase a new home but do not have enough funds available from the sale of their existing home.

By combining the proceeds from their home sale with the new funds from a reverse mortgage, people are able to afford the home they want to buy.

Can I use a reverse mortgage to buy an investment property?

Yes, you can use a reverse mortgage to buy an investment property.

You can place the mortgage on your primary home and then use the funds to buy the new property.

You can also place a reverse mortgage on the second property if you need additional funds.

You cannot place a reverse mortgage on the investment property unless you also place one on your primary home.

Can I get a reverse mortgage on my cottage?

It is possible to get a reverse mortgage on your cottage or a secondary home if you are also getting a reverse mortgage on your primary home at the same time.

You cannot get a reverse mortgage on a cottage otherwise.

What kinds of properties are eligible for a reverse mortgage?

The following types of properties are eligible to receive a reverse mortgage:

detached homes
semi-detached homes
duplexes, triplexes and quadplexes
linked homes
townhomes
apartment-styled condominiums
modular homes (with restrictions)

If your home is on leased land, then it will NOT be eligible to receive a reverse mortgage.

Fractional interests or co-operatives are not eligible to receive a reverse mortgage.

Can I Use a Reverse Mortgage to Pay for Long-Term Care?

Many people now use a Reverse Mortgage to pay for long-term care costs.

Reverse mortgages improve cash flow by allowing homeowners to convert part of their home equity into funds.

These funds can be received in monthly instalments to pay for the ongoing long-term care costs. These costs can be for private health care expenses incurred at home or for the costs of a nursing home or a retirement home.

Using a reverse mortgage to pay for these health care costs will not affect your eligibility for government benefits.

You can learn more by reading How to Pay for Health Costs Using a Reverse Mortgage.

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How do I know if a reverse mortgage is right for me?

Whether or not a reverse mortgage is right for you depends on your individual financial situation, goals, and needs. It is important to carefully consider the costs, benefits, and consequences of a reverse mortgage before making a decision. You should consult with a reverse mortgage specialist to help you make an informed decision.

Learn more by reading When is a Reverse Mortgage a Good Idea?

Can I get a reverse mortgage if my spouse is younger than 55?

The major reverse mortgage lenders require all homeowners to be over the age of 55 in order to qualify for a reverse mortgage.

Some of the small regional lenders may make an exception if a spouse is younger than 55. You can learn more about reverse mortgage age rules in our blog.

Can I use the money from a reverse mortgage to renovate my home?

Yes, you can use the money from a reverse mortgage to renovate your home, but you should carefully consider the costs and potential impact on the value of your home.

Many homeowners use a reverse mortgage to renovate their property so they can age-in place and make their homes more accessible for their future needs.

Learn more by reading How to Use a Reverse Mortgage to Aging-in-Place.

What happens if I want to move out of my home temporarily?

If you want to move out of your home temporarily, such as for an extended vacation or to stay with family, you can do so without affecting the reverse mortgage.

How long does it take to repay a reverse mortgage?

Remember, you do not need to make payments with a reverse mortgage. The loan is typically repaid when the homeowner dies, sells the home, or moves out permanently. In these circumstances, you will be given a reasonable time to arrange takeout financing to repay the reverse mortgage.

Can I change my mind after getting a reverse mortgage?

Yes, you can change your mind without penalty before the lawyers register the reverse mortgage against your home's title. After the reverse mortgage has been registered against the title of your home and you have received the funds, you will have to return all the funds along with interest and pay a prepayment penalty.

How do I find a reputable lender for a reverse mortgage?

The most reputable reverse mortgage lenders are HomeEquity Bank and Equitable Bank. They are the largest lenders in Canada and they make up approximately 95% of the reverse market in Canada.

Want to learn more about these lenders? Read our Comparison of HomeEquity Bank and Equitable Bank.

Do other lenders offer reverse mortgages in Canada? Learn more by reading Which Lenders Offer Reverse Mortgages in Canada.

How long does it take to get a reverse mortgage?

The process of getting a reverse mortgage typically takes several weeks. It may take longer depending on the complexity of the application.

What happens if I default on my reverse mortgage?

If you default on your reverse mortgage by not paying property taxes, keeping home insurance or maintaining the property, the lender can foreclose on your home and sell it to recover the loan balance.

Can I refinance my reverse mortgage?

Yes, you can refinance your reverse mortgage, but you will need to pay off the existing loan balance with the proceeds from the new loan. You can replace your original reverse mortgage with a larger reverse mortgage or even a traditional mortgage.

What happens if I outlive the term of my reverse mortgage?

It is not possible to outlive your reverse mortgage as long as you get it from one of the national lenders. At the end of your mortgage term, you would simply renew your reverse mortgage for another term automatically. Automatic renewal may not be possible if you borrow from a smaller regional lender. You can learn more by reading How a Reverse Mortgage Works and What Happens to My Reverse Mortgage When I Die to learn more.

Can I leave my home to my heirs if I have a reverse mortgage?

Yes, you can leave your home to your heirs if you have a reverse mortgage, but they will be responsible for repaying the loan balance. Typically, they would obtain their own mortgage to repay the reverse mortgage.

What happens to my estate when I have a reverse mortgage?

When you have a reverse mortgage, the loan must be repaid when you die. If the value of your home is less than the amount owed on the reverse mortgage, your estate will not be responsible for the difference.

Learn more by reading our Guide to Repaying a Reverse Mortgage.

How does a reverse mortgage affect my government benefits?

The money you receive from a reverse mortgage is not income, it is a loan. It should not affect your income-based benefits such as old age security (oas) or guaranteed income supplement (gis).

How does a reverse mortgage affect my taxes?

The money you receive from a reverse mortgage is not taxable income.

Can I use the money from a reverse mortgage to fund my retirement?

Yes, you can use the money from a reverse mortgage to fund your retirement and to supplement your private or government pensions.

Can I use the money from a reverse mortgage to pay off debt?

Yes, you can use the money from a reverse mortgage to pay off debt. In fact, you can use the money for any purpose.

What happens if the value of my home decreases?

Generally, this is not an issue since the lender will have ensured you had sufficient equity to absorb such a price decrease. Some lenders also offer a guarantee that your liability will not be greater than the value of your home.

Can I sell my home if I have a reverse mortgage?

Yes, you can sell your home if you have a reverse mortgage. The proceeds of the sale will be used to repay the reverse mortgage and you will receive the balance of the sale proceeds.

What happens to my home when I get a reverse mortgage?

You continue to own your home when you get a reverse mortgage, but the lender has a mortgage registered on title against the home.

Will I need to make monthly payments on a reverse mortgage?

No, you do not need to make monthly payments on a reverse mortgage. Instead, the loan is repaid when the homeowner dies, sells the home, or moves out permanently.

Are there any fees associated with a reverse mortgage?

Yes, just like a traditional mortgage, there are fees associated with a reverse mortgage, including appraisal fees, legal fees, and the lenders administrative charges. Check out our blog article on Reverse Mortgage Fees for more information.

What is the interest rate on a reverse mortgage?

The interest rate on a reverse mortgage can vary depending on the lender and the type of reverse mortgage you choose. We've written about how reverse mortgage interest rates work in our blog and you can always get information specific to your situation by contacting us.

Can I get a reverse mortgage if I have poor credit?

Your credit score is not a factor in determining your eligibility for a reverse mortgage if you are over the age of 55. Read our article about reverse mortgages and bad credit to learn more.

Can I get a reverse mortgage if I still have a mortgage on my home?

Yes, you can get a reverse mortgage if you still have a mortgage on your home, but you must pay off the existing mortgage balance with the proceeds of the reverse mortgage.

What is a reverse mortgage?

A reverse mortgage is a type of loan that allows homeowners who are 55 or older to access the equity in their homes. At retirebetter.ca we have lending partners who will offer a reverse mortgage to homeowners younger than 55.

Learn more by reading How a Reverse Mortgage Works, the Difference Between a Reverse Mortgage & a HELOC and an Explanation of Reverse Mortgage Fees.

How much money can I borrow with a reverse mortgage?

The amount of money you can borrow with a reverse mortgage depends on your age, the value of your home, and current interest rates. You can try our Reverse Mortgage Calculator for a fast approximate amount or contact us to get the most accurate loan amount you are eligible for.

What are the eligibility requirements for a reverse mortgage?

To be eligible for a reverse mortgage, the homeowner must be at least 55 years old, own their home outright or have a small mortgage balance, and reside in the home as their primary residence.

How does a reverse mortgage work?

With a reverse mortgage, the lender provides the homeowner with a lump sum or regular payments, which do not have to be repaid until the homeowner dies, sells the home, or moves out permanently.

How do I receive the money from a reverse mortgage?

You can receive the money from a reverse mortgage as a lump sum, regular payments, or a line of credit.

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