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Reverse Mortgage Canada

We’re here to support you in maintaining your current home.

With a reverse mortgage, you may transform a portion of your home equity into cash, enabling access to a steady source of tax-free funds without making any monthly payments—all while keeping property ownership.

You may be qualified for a Reverse Mortgage if:

  • You’re a homeowner who is 55 or older.
  • In British Columbia, Alberta, Ontario, or Quebec, you reside in a city or a large town.
  • Your house is your primary residence for at least six months every year.
  • All titleholders of the property may apply as a single borrower.

For half a century, we’ve been changing Canadian banking—and our reverse mortgage is no exception. At the best rates available, our collection of reverse mortgage options can enable you to access the amount of equity in your home that works for you. Whether you wish to have your funds as a one-time lump sum, an undrawn reserve for future use, or a combination of both, our Reverse Mortgage Flex alternatives give you the flexibility and value you desire.

You may use the money from your reverse mortgage to:

  • To be considered eligible, you must be over the age of 65 and own at least 10% of the property’s appraised value.
  • You may make prepayments at specific times or only when the mortgage falls due.
  • The interest on a reverse mortgage accrues until the loan is paid back (as a result, the equity in your property might decrease as interest rates rise over time).
  • You can take out a loan for long as you want.
  • When the property is sold or transferred, when the final borrower dies or leaves their house, or goes into default, the mortgage is fully repaid.

The Difference

We’re sure that our reverse mortgage is the greatest option for you to use your home equity whenever and however you want. We believe that, in retirement planning, Canadians should consider their entire financial portfolio.

The home is generally the person’s largest asset in their portfolio, and getting some equity from it may be the best option for you depending on your circumstances.

Whether you already have a mortgage and want to pay it off with a reverse mortgage, or are simply weighing your alternatives for more cash, we can assist.

Frequently Asked Questions

Will I be able to keep my house?

Yes, your home is protected by the reverse mortgage. When you take out a reverse mortgage, you do not give up your property rights; rather, they are extended to the lender.

A reverse mortgage is similar to a standard mortgage or home equity line of credit in that it is registered against your property.

What is the maximum amount of equity I’ll have after everything is said and done?

The remaining equity in your house will be determined by the difference between the current value of your home and the amount owed on the reverse mortgage at any moment.

Use our reverse mortgage calculator to explore various future situations based on the loan term, interest rate, and anticipated home value growth.

How can I utilize the cash equivalent of a reverse mortgage?

You can use the cash to pay off your regular mortgage, cover daily expenses, make home improvements, pay for medical bills, in-home care, and other costs. It is entirely up to you how you want to utilize the money.

What if I have a mortgage on my home?

If you have a mortgage, it must be paid off before the reverse mortgage can be registered in the first position. You may use the funds from your initial reverse mortgage advance to pay off any outstanding debts or liens on your home.

Is it true that if my spouse dies, I’ll need to sell my house?

If both spouses are joint tenants, the surviving spouse can remain a borrower and receives all of the associated perks of a reverse mortgage.

Who is responsible for property taxes?

You must remit payment directly to the municipality for property taxes. BC residents may participate in the British Columbia Tax Deferment Program once their reverse mortgage has been paid back.

Is it possible for me to use a Power of Attorney (POA) on my behalf?

When applying for a reverse mortgage, you can use the POA for property. Your attorney must be capable of dealing with real estate. Because you are out of the country, your POA will not be authorized to act on your behalf.

Is it better to take out a home equity loan?

Although a home equity line of credit might be an ideal solution for you, it does need income to service, and you’ll have to make required regular payments. This might make it difficult for retirees to qualify and stay in compliance.

Why is it necessary for me to obtain independent legal counsel (ILA)?

If the property is held under a legal stratum of titles, such as in trust or a partnership, then the ILA must be procured from the legal titleholder and any non-title holding spouse.

Please read carefully the reverse mortgage documents before signing them, as IRM is licensed to only provide you with this information to verify your understanding of the conditions and terms of the arrangement, that you are of sound mind and judgment, and that you are not being compelled to sign the mortgage papers.

How can I save money on my reverse mortgage by paying it off sooner?

You can limit the amount of your initial loan and take out additional cash only as needed to minimize interest accrual. You may also choose to pay down interest monthly without incurring a prepayment fee.

The Process

Do you want to learn more about how a reverse mortgage works? Read our step-by-step guide on how to get a reverse mortgage (steps can happen simultaneously). Your advisor will be able to assist you with your decisions.

  1. Apply & Receive Conditional Approval

The lender must perform a full credit check, which includes a credit report review and an examination of your eligibility. The amount you may expect, the interest rate and length of time, any fees, and a schedule of advances (if applicable) are all factors to consider. Within 21 days, the Mortgage Commitment agreement should be signed and returned.

  1. Valuation/Appraisal & Document Submission

All of the papers required by your conditional Mortgage Commitment have been obtained. All of the documents requested in your conditional Mortgage Commitment must be sent to Bank. Confirm the closing arrangement you’d want to pursue. Your advisor might assist you in determining the most suitable course of action for you.

  1. Meet With Your Lawyer(s)

Your closing lawyer or the closing service provider (FCT) will take care of the complete procedure, depending on the closing deal you’ve picked. You’ll need to see an attorney of your choice for Independent Legal Advice in both situations (ILA). A mortgage-related obligation is required by the CILA (which stands for Certificate of Identity and Authorization) rule, which requires that all parties to a mortgage agreement (both titleholder and non-titleholder, if applicable) receive an explanation of the documents from an independent third party attorney.

  1. Close Your Mortgage

The closing service (FCT) or your closing lawyer will utilize the signed paperwork from your lawyer(s) to finalize the mortgage funding and confirm the method for payment (i.e. direct deposit or cheque). Any outstanding mortgages and other applicable debts will be paid by the closing service (FCT) or your closing lawyer before any net proceeds of the mortgage are dispersed on the settlement date, as specified in your mortgage papers.

How do I get a Reverse Mortgage?

Step 1: Do Your Research

  • Learn about reverse mortgages in Canada at our site.
  • Consult with your financial advisor to see if this plan is right for you and your family.
  • Learn more about the product’s features and associated expenses.
  • Consider your short- and long-term financial demands.

Step 2: Conduct Initial Phone Meeting to Review Eligibility & Assess Needs

You may be eligible if you meet the following:

  • The age requirement varies from one state to the next, although it is generally between 55 and 65.
  • The property is in a significant city in British Columbia, Alberta, Ontario or Quebec
  • Residency: This means you live in the property for at least six months out of each year.
  • The three requirements for property qualifications are as follows: They must be owner-occupied and not used for a commercial purpose. Mobile homes, co-ops, acreages, and farms are all ineligible.
  • All titleholders of the residence are eligible to apply as borrowers.
  • To pay annual property taxes, fire insurance, and condo fees (where permitted), you will need to have a high financial capability.
  • The minimum value of a property must be at least 250,000 dollars (estimate your property’s value using recent local sales, a tax assessment bill, or online tools such as Realtor.ca, Zillow, or Redfin)

Step 3: Submit Application and Prepare Supporting Documents

Prepare and apply to evaluation.

  • After you apply, Bank will look it over and make a brief client consultation with you before contacting your credit bureaus.
  • You can take the time now to sort out any documents that may be needed in the future. Prepare any documentation you’ll need ahead of time so you don’t have to worry about it later.

Step 4: Structure Your Mortgage

You will be asked to:

  • Choose your advance payment method: Lump Sum Advance, Subsequent Single Advances, or Recurring Advances
  • Determine whether a fixed or variable interest rate would be appropriate for your financial requirements.
  • Select the length of time you wish to reset your interest rate.

Step 5: Finalize Application

The lender has issued a letter confirming the mortgage amount, interest rate, frequency of payments, and the required paperwork.

  • Should you wish to proceed, Bank will request you complete the following:
  • Sign the Bank commitment letter and review it.
  • Ensure that you have plenty of supporting financial/asset documentation on hand.
  • Provide a recent property tax statement, which confirms that the home is up to date.
  • Identify and provide the contact information for the legal representative who will be providing closing services.
  • Identify and provide the contact information for the legal representative who will be giving required independent legal advice (ILA).
  • Make a quick phone call with the bank.
  • Fill in the blanks on the commitment letter along with the information/documents you’d like us to have. Send both documents back to Bank for approval.

Step 6: Organize and Submit Appraisal

Bank will review the appraisal report and conduct a final client contact following its submission.

Step 7: Meet with your ILA and closing Lawyers

  • Meet with your ILA lawyer to go over and sign the necessary Bank documentation.
  • Your closing lawyer will receive the signed Bank paperwork from your ILA attorney.
  • For the completion of your mortgage, meet with your closing attorney.

Step 8: Funds Become Available

  • You can get money from a Roth IRA if you’ve contributed to one since the start of the year without making any withdrawals.
  • You’ll want to hire a closing attorney as soon after the sale is complete as possible. The money will need to be transferred from your seller’s account to yours, so you’ll want your closing lawyer to handle that process.

Why Reverse Mortgage Prepayment Charges Matter

The Bank Reverse Mortgage is intended to be a long-term answer for retired Canadians. However, we understand that life changes occur, and financial needs change. We designed our product with this flexibility in mind.

Reverse mortgages do not have a term like amortizing loans, and hence the borrower is unable to repay the mortgage without incurring a penalty when the interest rate resets. Although the reverse mortgage product is intended for longer-term borrowing, some consumers may use it for shorter periods if they understand that prepayment expenses will be greater.

Why does a prepayment exist in the first place?

A prepayment fee is levied to offset the lender’s internal expenses incurred while issuing a reverse mortgage (such as administration, overhead, and other financial expenditures). These costs are typical in most sorts of loans.

Prepayment Charge Comparison

In the case of reverse mortgage services, prepayment costs should be considered. The following is a sample of prepayment expenses in action. For a 5-year fixed interest rate reset term with a $300,000 loan at 3.79 percent, the figures below assume a preapproval fee of $100 and annual cost savings to borrowers.

Prepayment Privileges

Borrowers can save money on prepayment costs by taking advantage of prepayment privileges. The Reverse Mortgage option also allows for flexible repayment options:

  • Any interest that remains unpaid is automatically paid once a month, on the first day of the following month.
  • You may prepay up to 10% of outstanding principal once every 12 months.
  • After 5 years, you may pay up to the remaining amount owing in 30 days if your interest rate is reset.
  • During years 6 through 10, you may prepay up to the whole outstanding amount with 3 months’ notice.
  • Any amount paid prepayment without a penalty in year 10.

When it comes to choosing a reverse mortgage, rates and loan amounts are typically the most significant factors. Prepayment terms are seldom considered until a need to repay the reverse mortgage arises. Thousands of dollars may be lost if you don’t get your money back. If you’re unsure how long you’ll need a reverse mortgage, the Bank option might be ideal because of our friendlier prepayment penalties.