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A reverse mortgage is a specialist home loan only available to people in Canada over the age of 55. It is called this because - unlike other mortgages - it doesn't require regular monthly payments. The key features:
You must be over 55 years old to qualify.
No monthly payments are required.
The maximum amount you can borrow is 55% of the value of your home.
Interest is charged but added to the amount owed, instead of being paid.
It is specifically for seniors - or those getting closer to retirement - hence the age restriction.
Canada vs USA - Beware
Please note that the above information relates to a reverse mortgage in Canada. For example, the age to qualify for a reverse mortgage in the USA is actually 62. This is why our free guide is a must read, as many people get confused between the Canada and U.S. reverse mortgage - the two products are very different.
If you have been reading any information that references the age as 62, or uses terms such as 'HUD', 'HECM', 'FHA' or 'churning' - then you have been reading information that relates to a reverse mortgage in the U.S.A - none of these terms have anything to do with Canada. See our free article on Canada vs the USA for more information.
You can also see the definition on the Government of Canada website or download our free reverse mortgage guidebook below to learn more about how it works in Canada.
What About An RBC Reverse Mortgage Or Other Lenders?
At present, the "Big 5" Canadian banks - RBC, BMO, CIBC, Scotiabank and TD do not offer a reverse mortgage.
It is only offered by two lenders: Home Equity Bank (sometimes written as HomeEquity Bank) - with their CHIP reverse mortgage (official website - is www.chip.ca) who are a regulated and Schedule I chartered bank in Canada - as well as Equitable Bank (official website is www.equitablebank.ca) with their Equitable PATH Home Plan Reverse Mortgage - which was launched in January 2018.
Manulife also have a product that can work in a similar way to a reverse mortgage - please contact us if you are interested in learning more about this.
What About Interest Rates?
For more on this and where the current reverse mortgage rates lie, check out our reverse mortgage rates article.
Award Winning Information You Can Trust
We've won dozens of awards for our mortgage advice - including the prestigious Most Trusted Mortgage Agent in Canada award from the Wealth & Finance Awards.
You can still take this out if you have a mortgage on your property. It would be the exact same process that you'd go through in taking your mortgage to another lender - they will simply replace your existing loan (essentially moving it to another lender). You'd then get to keep any excess money available. Check out this article on the top misconceptions for more like this: read our article on the top 8 misconceptions.
A reverse mortgage allows you to move away from having to make monthly mortgage payments while still gaining access to the equity in your home. If you are considering a reverse mortgage, make sure you take a look at the guide.
CHIP stands for the Canadian Home Income Plan (CHIP) - which was previously what this product was called before it was changed to CHIP reverse mortgage. The name was changed to the CHIP reverse mortgage to more accurately reflect the type of loan this is (it is a mortgage, after all, and takes into account your home equity, since you are accessing the equity in your home).
Equitable bank also recently launched their own reverse mortgage in January 2018 - theirs is very similar to the CHIP product.
There are 3 key factors in deciding how much you qualify for under a reverse mortgage: (1) The value of your home, (2) Your age and (3) The property type. You may qualify for as much as 55% of your home equity - that is the maximum available in Canada for a reverse mortgage.
We've tried to cover everything on how reverse mortgages work in the guide, including different reverse mortgage lenders, alternatives to long term care (allowing you to live in the home you love with a product that gives you access without having to sell your home)
For all the advantages and disadvantages of a reverse mortgage, I suggest you check out our free article on the reverse mortgage pros and cons. It outlines everything you need to know.
Reverse mortgages give you the chance to access your home equity without the risk of losing your home. But, it's important to look at the pros and cons.
We believe in this product which allows you to keep your home, but want to make sure you have all the facts and answers - things like what happens when a borrower dies, understanding that the reverse mortgage is a loan, the comparison to a regular mortgage, and more. Which is why we wrote the article above. Give it a read and let us know of any questions you have!
I am a licensed mortgage agent with Dominion Lending Centres Edge Financial - FSCO License #10710. I am also a certified Chartered Accountant. In 2017 I was also named one of the top Mortgage Professionals in Canada (under 35) by Canadian Mortgage Professional magazine largely because of my work on the reverse mortgage product.
Our mortgage brokerage is independently owned and operated - this means that you get independent, objective and professional advice on all of your financial needs. We don't work for any bank or lender - you are our client. I personally created this website- Reverse Mortgage Pros - so that it could a hub and provide all the information and advice that anyone would ever need.
We are also affiliated with Dominion Lending Centres - the number one company in Canada for any kind of mortgage loan, not just a reverse mortgage and registered with the Better Business Bureau.
Just so you have it in black and white: our guide, our free 90 second reverse mortgage assessment and all the advice and recommendations we provide you regarding a reverse mortgage are completely free - you will never pay us a penny ever for any of our reverse mortgage advice.
Reverse mortgages can be an incredibly useful option to access the value of your home, depending on your situation. But it's important to look at the cost of reverse mortgages and weigh them against your other options, including how it works with reverse mortgage interest, and more.
If you are interested in the costs and fees of a reverse mortgage, check out our article on reverse mortgage in Canada - costs and fees. We cover everything in there, including how it works (including whether you want to make monthly mortgage payments or not) and more.
The free guide is a PDF file (opens with Adobe or any PDF or eBook reader). I will email it to you immediately. I will also continue to send you other free tips, tricks and advice to help you make your decision with regards to a reverse mortgage - you can unsubscribe any time if the free guide is more than enough for your needs.
We have written an article examining the alternatives, including a home equity line of credit, to compare them to reverse mortgages in more detail.
Since we are independent - we don't work for either HomeEquity Bank or Equitable Bank - we want to make sure that you see all of the options out there, and see what the reverse mortgage allows you to do. We have done our best to lay out all of the factors, including the closing costs, when you have to repay the loan, how it works to access the value of your home, how the fair market value of your home is assessed, and how you qualify. Take a look at our article above to learn more!
While with reverse mortgages, it is much easier to get than any other kind of home equity loan, since we are still talking about lending large amounts of money, this does not make it a walk in the park. Both the companies that offer this - Home Equity Bank and Equitable Bank - are Schedule I banks (the highest level in Canada - the same as RBC, BMO, CIBC, Scotiabank and TD) - so they do require some paperwork. There are factors to ensure that you are eligible for a reverse mortgage, including that you must ber at least 55 years old, as mentioned above, as well as an assessment of the value of your home, whether you are going to make monthly mortgage payments, and more. For more on the requirements, please get in touch with us.
If you have any further questions then please let me know! I hope you found some value from this.