“With a reverse mortgage, you no longer own your home.”

FALSE. You always maintain title, ownership, and control of your home, as long you continue to meet your mortgage obligations (i.e., paying property taxes and maintaining the home). The reverse mortgage lender simply has a first mortgage on the title, in the same way as a traditional mortgage.

“You’ll owe more than the value of your home.”

FALSE. It is federally mandated that all reverse mortgages come with a “no negative equity guarantee.” As long as you meet the required mortgage obligations, the amount you owe on the due date will not exceed the fair market value of your home.

“Reverse mortgages are expensive.”

FALSE. An appraisal of your property and independent legal advice is required for a reverse mortgage. Additional fees include a closing and administration fee. When compared to alternatives like downsizing or moving to another home, a reverse mortgage can be an affordable option.

“Reverse mortgages have higher interest rates.”

DEPENDS. While interest rates are typically higher than a traditional mortgage, it’s important to remember that for many retired Canadians, monthly mortgage payments are difficult to afford. Plus, many struggle to even qualify for a traditional mortgage. For these reasons, many retired Canadians choose a reverse mortgage over traditional solutions.

“You can’t pass on your home.”

FALSE. Your heirs will always have the option to keep the property by paying off your reverse mortgage after you pass away. In addition, with the “no negative equity guarantee,” your heirs will never owe more than the fair market value of the home, as long as all mortgage obligations were maintained.

Written by Equitable Bank