Turn your home equity into tax-free cash, without selling and without monthly mortgage payments.
A reverse mortgage lets homeowners 55 and older borrow against the value of their home. You keep the title and live in your home, and the loan is repaid when you sell, move out, or pass away. Here is how it works and what to know first.
You've started an application.
Saves as you go · No credit check · A licensed mortgage professional follows up
1You must be at least 55 (every owner on title), own your home and live in it as your primary residence.
2You can usually borrow up to about 55 percent of the home value, depending on your age, the home and its location. The older you are, the more you can access.
3There are no required monthly mortgage payments. Interest is added to the balance, so what you owe grows over time, but you can pay it down at any time.
4You must keep paying property tax and home insurance and keep the home in good repair. The money you receive is generally not taxable income, but speak to your accountant.
Get ready
What lenders will ask you for
Government photo ID for every owner on title
Your most recent property tax bill
Your latest mortgage or line of credit statement, if the home has one
Proof of home insurance
The name of your lawyer for the independent legal advice that is required
Your options
Which kind of lender fits you
Option 1
Reverse mortgage
A lump sum, regular monthly advances, or both, with no required payments while you live in the home.
Option 2
Home equity line of credit (HELOC)
Cheaper interest, but you need qualifying income and must make monthly interest payments.
Option 3
Downsizing
Sell and move to something smaller, freeing equity without any loan.
Option 4
Family help or a co-signer
A relative can help you qualify for a conventional mortgage or line of credit.
Avoid these
Common mistakes
!Borrowing more than you need. Interest compounds on everything you take.
!Not telling your children or heirs, who may be surprised when the home is sold.
!Skipping the independent legal advice that lenders require.
!Falling behind on property tax or insurance, which can put the loan in default.
Take action
Your first steps
1Write down why you want the money and how much you really need.
2Gather your ID, property tax bill and any existing mortgage statement.
3Talk it through with your family so there are no surprises later.
4Start the intake so a broker can compare reverse mortgage lenders and rates for you.
5Book your independent legal advice before you sign.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For reverse mortgage borrowers
What is the age of every owner on title, and do you live in the home full time?
What is the home worth and where is it (city and type of home)? Is there any mortgage, line of credit or lien on it today, and how much?
How much money do you want, and what is it for (income, debts, repairs, helping family, care)? A lump sum, monthly payments, or both?
Have you talked to your family or heirs, and do you already have a lawyer?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
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Answers
Questions people ask
Who qualifies for a reverse mortgage in Canada?
Homeowners aged 55 or older who live in the home as their primary residence. Every owner on title must be 55 or older. Income and credit matter much less than with a regular mortgage.
Do I still own my home?
Yes. You keep title and can sell or move at any time. The loan and accrued interest are repaid from the sale or when you leave the home.
How much can I borrow?
Typically up to about 55 percent of the appraised value. The exact amount depends on your age, the home type, and the location.
Will I owe more than the house is worth?
Canadian reverse mortgages offered through major lenders include a no-negative-equity guarantee when you follow the loan terms. Your broker will confirm the details for your lender.
Does starting the intake affect my credit?
No. It is only questions. A credit check, if needed, comes later with your permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.