What is a Reverse Mortgage?
A reverse mortgage in Canada is a financial tool designed for homeowners aged 55 and older to access their home equity without selling or making monthly payments. This financial tool is designed to help retirees improve their cash flow, consolidate debt, or fund major expenses—all while continuing to live in their home.
How Does a Reverse Mortgage Work in Canada?
You can borrow up to 59% of your home’s value, depending on your age.
The loan is secured against your home, but you retain ownership.
No monthly payments are required—the loan is repaid when you sell your home, move into long-term care, or pass away.
The amount borrowed is tax-free and does not affect government benefits like CPP or OAS.
Why Consider a Reverse Mortgage?
✔️ Stay in Your HomeMost Canadians want to age in place rather than downsize or move. A reverse mortgage allows you to access equity without selling.
✔️ No Monthly PaymentsUnlike traditional loans, you don’t need to make monthly payments. The loan is repaid when you sell your home or move out.
✔️ Flexible Access to Funds
Lump sum for immediate needs
Scheduled payments (monthly or quarterly) for consistent income
Ad-hoc withdrawals as needed
✔️ Use Funds However You Like
Cover daily living expenses
Pay off existing mortgage or debt
Gift an early inheritance to children for a down payment
Renovate your home to make it more accessible
Invest in a second property or vacation home
Eligibility Requirements
To qualify for a reverse mortgage, you must:
✔️ Be 55 years or older (both applicants if applicable)
✔️ Own a primary residence in Ontario, BC, Alberta, or Quebec
✔️ Have a minimum home value of $250,000
✔️ Live in a major or medium urban center
💡 Note: The older you are, the more equity you can access.
How Much Can You Borrow?
Age | Loan-to-Value (LTV) Maximum |
55 | 15% |
60 | 30% |
65 | 32% |
70 | 36% |
75 | 46% |
80 | 54% |
85 | 59% |
📌 Example:
A 75-year-old homeowner with a $1M property could access up to $460,000 tax-free.
Repayment & Exit Strategy
When is a Reverse Mortgage Repaid?
When you sell your home
180 days after the last borrower passes away
One year after moving into long-term care
If property taxes, insurance, or maintenance are not kept up
💡 Good to Know:
✔️ No penalty for paying off after death
✔️ Heirs have 6+ months to settle the estate
✔️ Your home will never be worth less than the loan amount due
Costs & Fees
🔹 Interest Rates: Typically 6.59% – 8.09% (higher than traditional mortgages)
🔹 Setup Fee: $995 (instead of a 1% lender fee)
🔹 Legal Fees: Two lawyers required—one for mortgage closing, one for independent advice
🔹 Appraisal Fee: Required to determine home value
Reverse Mortgage Myths vs. Facts
🚫 MYTH: I will lose ownership of my home.
✅ FACT: You remain the homeowner, just like a traditional mortgage.
🚫 MYTH: My home equity will disappear.
✅ FACT: You can still build equity as home values rise. The loan amount never exceeds fair market value.
🚫 MYTH: It’s too expensive to exit.
✅ FACT: No hidden fees, and prepayment penalties decrease over time.
🚫 MYTH: Reverse mortgages are a last resort.
✅ FACT: Financial advisors now recommend them as a wealth management tool.
Who is a Reverse Mortgage For?
✔️ Homeowners who want to age in place
✔️ Retirees looking to supplement income
✔️ Those who want to help family financially
✔️ Homeowners looking to pay off debt without selling
✔️ Investors wanting to purchase a second property
Reverse Mortgage Case Study
🔹 Meet John & Mary (Ages 75 & 73)
Home value: $1M
Reverse mortgage credit limit: $400K (40% LTV)
Initial advance: $320K (80% drawn)
Use of funds: Debt consolidation
💡 Results:
Eliminated monthly payments on high-interest debt
Increased retirement cash flow
Remained in their home stress-free
Is a Reverse Mortgage Right for You?
A reverse mortgage isn’t for everyone. It’s important to consider:
✅ Do you want to stay in your home long-term?
✅ Do you need additional funds for retirement expenses?
✅ Are you comfortable with home equity being used as a financial tool?
💡 If you’re curious about how much you qualify for, contact Seventy Seven Park today for a personalized assessment.
Get Expert Advice
Seventy Seven Park specializes in real estate wealth management, helping homeowners make informed financial decisions.
💡 Want to learn how much equity you can unlock? Let’s talk.
Comments