What is a Reverse Mortgage?

A reverse mortgage is a loan secured against the value of your home. It lets homeowners aged 55 and older access up to 55% of their home’s value (up to 59% with some lenders) as tax-free cash to pay off debt, renovate, give family an early inheritance, buy another property and more, without having to move or sell.

Lenders we work with: HomeEquity Bank (CHIP) and Equitable Bank, both of which offer reverse mortgages in Alberta.

Benefits of a Reverse Mortgage

Easy to Qualify

Income verification and credit score are not required to qualify for a Reverse Mortgage.

Tax-Free Money

The money accessed with the Reverse Mortgage is tax-free.

Maintain Ownership

With a Reverse Mortgage, the homeowner maintains title ownership of the home.

No Payments

No payments are required (principal or interest) for as long as the homeowner lives in the home.

Relieve Financial Stress

Depending on your age, home value and location, you can access up to 55% of your home’s value. Lenders set the amount conservatively so equity stays in your home for the life of the mortgage.

Worried About Your Retirement?

How about receiving a lifetime mortgage deferral.

You can receive income from your home without having to sell.

Qualifying Amount is NOT based on income, credit, or health.
It IS based on your age, your home value, and your home’s location.

Two ways to access money from your home

The first one helps you take a lump sum of money out of your home.
The second provides you with regular payments.

They are both designed to ensure you never owe more than the home is worth, while still being able to access the money you have built up in your home, without selling your home.

1. Lump-Sum Reverse Mortgage

A lump-sum reverse mortgage is ideal for homeowners 55+ who are looking for a one-time lump sum to either alleviate financial stress by paying off existing debt, or are looking to finance a major expense such as a second home or a car, are facing costly healthcare needs, or are looking to help a family member out with a down payment or tuition costs for example.

Good to know: the older you are, the more you can qualify for, up to 55% of your home’s value with CHIP (up to 59% with Equitable Bank). HomeEquity Bank’s minimum initial advance is $25,000.

2. Income Reverse Mortgage

An income reverse mortgage suits clients who don’t need a large lump sum and simply want to supplement their monthly retirement income. With HomeEquity Bank’s Income Advantage, there is a $20,000 minimum initial advance, then regular advances of at least $1,000 monthly or $3,000 quarterly, which can be customized to your needs.

Good to know: interest builds more slowly than with a lump sum, because the money is disbursed in instalments instead of all at once (after the initial $20,000 advance).

Benefits:

- There are no regular principal or interest payments required.

- You still LIVE IN and OWN your home.

- The money you receive is tax-free, because it is equity from your own home.

- Old Age Security, CPP and Guaranteed Income Supplement are not affected.

- You choose when you get the money.

Considerations:

- Interest rates are higher than conventional mortgage rates, and interest compounds because no payments are required.

- The loan is repaid when the home is sold, the last borrower moves out (for example into long-term care), or the last borrower passes away.

- It may prevent you from securing another loan on your house.

- You may incur a prepayment charge if you pay out some or all the mortgage, depending on the lender and when you make the prepayment. Prepayments are not required.

- A home appraisal will be required.

- You will be required to have independent legal advice and may incur legal fees from your lawyer.

Keep in mind:

You will still be required to pay your property taxes, home insurance, and condominium fees (if applicable). You will also have to keep the house and property well-maintained.

Some ways a reverse mortgage can reduce financial stress:

A reverse mortgage can be taken out as a lump sum or as monthly supplementary income
Pay down other debt
Pay off your current mortgage
Pay monthly bills and medical expenses
Maintain investments
Prop up current pensions
Help cover travel costs
Buy a vacation property
Visit family and friends in other parts of the country
Road trip from one coast to the other
Provide financial assistance to children or grandchildren while you are still living
Help cover the cost of education for your grandkids
Fund a business venture
Help someone become a homeowner
Pay for renovations or repairs
Make your house more accessible
Accommodate your changing lifestyle

Qualifying

Applicant’s Age

Reverse Mortgages are open to anyone who is 55 years or older. If you have a spouse, both of you must be 55 or older to be eligible. On the flip side, there is no maximum age limit! The amount you can borrow increases as you age. This is one time when it pays to be older.

Property Value, Type and Location*

The property must be your primary residence, with an appraised value of at least $250,000. Lenders also consider your home’s type and location to make sure you always keep equity in your home. A home appraisal is part of the qualifying process.

You do not have to be mortgage-free when you apply! A reverse mortgage can take care of this for you. Any money you still owe on your home must come out of the reverse mortgage before you can borrow for other reasons. Say goodbye to monthly mortgage payments.

*Reverse mortgages are not currently offered in the territories. Equitable Bank lends only in eligible cities and towns in Alberta, BC, Ontario and Quebec.

Frequently Asked Questions

Is my information kept confidential?

Everything we talk about is confidential. We only share information with a lender once you fill out a mortgage application and we submit it to a lender for approval.

What if I do not get approved?

If we cannot get you approved for a Reverse Mortgage, we can look at other types of financing solutions.

How much does it cost to work with a broker?

For 99% of files, there are no fees to use our services as a broker. Some situations do require us to look at “Alternative Lenders” who charge a fee, but these are rare situations, and we will have this discussion if that becomes the case.

SAFEGUARDS

1.       You keep title and ownership of your home.
The lender registers a charge on title to secure the loan, but you do not transfer ownership to the bank.

2.       Lending amounts are conservative.
The maximum is up to 55% of your home’s value (up to 59% with some lenders), based on your age, property type and location, so the loan is designed to stay below your home’s value.

3.       Homes typically appreciate.
Interest accrues only on the amount borrowed, while your home’s value usually grows over time, which helps preserve your equity.

4.       No Negative equity guarantee.
Both HomeEquity Bank and Equitable Bank guarantee you will never owe more than your home’s fair market value when the loan is repaid, as long as you keep your property taxes, home insurance, maintenance and mortgage obligations up to date.

**The guarantee excludes fees and interest that accrue after the mortgage due date.

Reasons

“I need to alleviate the stress of debts”
You may be struggling with mortgage payments and credit card bills. You may be putting your children’s needs ahead of your own and helping them with a down payment on a home. You prefer not to access your savings or investment portfolio. You are looking for a solution to ease your financial stresses.

“I need to pay for an unplanned expense”
You may be facing an unexpected home repair such as a leaky roof. You may have to retrofit your house for mobility reasons or hire in-home healthcare for day-to-day living. You are facing a short-term financial strain and need funds to bridge the gap and take care of a necessary cost.

“I want to live life to the fullest”
Many Canadians 55+ finally have the time to do the things they want to do, but not the funds to do so. You may want to purchase a summer property or enjoy dining out more. You want to live the retirement lifestyle you’ve always dreamed of.

“I need to maintain my standard of living”
You may find it difficult to adjust your lifestyle after you retire. You are experiencing a shortfall in your retirement funds, and may need to supplement your monthly income or augment your pension income.