Access Your Home Equity And Defer Your Mortgage Payments

Every Canadian deserves a financially secure and comfortable retirement. If you are 55 years of age or older, a reverse mortgage can help you access your home equity while remaining in your principal residence.

A reverse mortgage is a loan against your property that allows qualifying senior homeowners to convert a portion of their home equity into a source of cash. This money is tax-free and does not require any monthly mortgage payments until you sell or move out of your home.

There are two providers of reverse mortgages in Canada:

1. Home Equity Bank – CHIP reverse mortgages
2. Equitable Bank – Reverse mortgages

Home Equity Bank is in partnership with and has been endorsed by both the Canadian Association of Retired Persons (CARP) and also the Royal Canadian Legion. They are the only Schedule I bank in Canada focused solely on reverse mortgages.

Equitable Bank is known as Canada’s Challenger Bank and an important (newish) entrant into the reverse mortgage market. We expect more mortgage lenders to start offering such mortgages in the coming years as the seniors’ mortgage market is poised for significant growth.

The rules between the two lenders may vary slightly. However, many aspects are the same.

How does a reverse mortgage work?

1. Get an estimate of how much of your home equity you can access: This varies, depending on your age (the younger you are, the smaller the percentage you may access).
2. Review your estimate with your mortgage agent: We can help answer the questions you have
3. Select a payment plan: You can access money as a one-time lump sum, monthly payments or both – it’s tailored to your individual needs.
4. You continue to own and live in your own home.
5. No payments are required until your mortgage comes due.
6. Enjoy life on your terms.

You can use a reverse mortgage for things like:

• Pay off a traditional mortgage and never worry again about monthly mortgage payments.
• Provide a living inheritance and gift money to your adult children or grandchildren.
• Debt management – pay off any existing debt.
• Purchasing power – buy a new home!
• Investing – rental properties, vacation property, stocks, business start-ups, or franchises.
• Retrofit your home to age more comfortably.
• Long-term care – hire full or part-time nursing care.
• Renovations for you or your children’s home.

Reverse mortgages give you more opportunity to live comfortably in a home that you love, even with a minimal income.

How are reverse mortgage loan amounts determined?

• Your age, with a higher amount available for higher ages. Eligibility kicks in at age 55, and your maximum borrowing power is a percentage of your home’s value. (Anywhere from 15% to 55%)
• Your property value.

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