A reverse mortgage is a type of exclusive mortgage product that allows homeowners to access a portion of their home equity without having to sell their property.

 

​Eligibility:

• Homeowners must be at least 55 years old for a federally regulated reverse mortgage.

• The home must be their primary residence.

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 Loan Amount:

• The amount of money the borrower can receive ranges between 30% and 60% of the fair market value- evaluated by the lender's appraiser.

• The older the borrower is, the more they can borrow.

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Loan Process:

There area a few lenders who offer the reverse mortgage in Canada. The approval process is quite simple and fast. Unlike the income verification of traditional mortgages, borrowers just need to show the financial ability to pay the annual property tax, home insurance and maintenance costs. Following that, the lender will appraise your home and determine how much you can borrow.

 

Funds Access:

Once approved, you can receive the funds in a lump sum in regular monthly payments, or as a line of credit.

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Repayment:

The loan is repaid when you sell the home, move out, or pass away. The repayment amount includes the principal and accumulated interest. 

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Interest Rate:

The interest rate for the reverse mortgage is always higher than the rate for traditional mortgages simply because the borrower doesn't pay any monthly payment. Both variable and fixed interest rates are offered by the reverse mortgages in a variety of the term options. Interest is charged on the amount borrowed and compounds over time. Most of lenders accepts if the borrow wants to pay Interest only in a regular basis. 

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Additional Fees:

 There may also be fees for setting up the loan, such as appraisal fees, legal fees, and administration fees.

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Ownership:

You retain ownership of your home, and you are responsible for maintaining it, paying property taxes, and keeping insurance in place. 
 

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