Reverse Mortgage – Myths Clarified

Bill Fraser • June 18, 2018

Nearly 70 percent of Canadians own their own home. For the vast majority of those homeowners, their home is their largest single investment. That can be frustrating as people retire and see the value of their home increasing and their monthly income decreasing. One easy way to get access to some of that money in your house is with a reverse mortgage.


Just what is a reverse mortgage? You may have heard about this financial product. Maybe a friend or a friend of a friend has one. However, there’s a lot of misinformation out in the world about these types of loans.

What is a reverse mortgage?

You may be wondering: what is a reverse mortgage? Simply put, a reverse mortgage is a financial product that allows Canadian homeowners age 55 and older, who either own their homes completely or who have a sizeable equity in their homes, to get up to 55 percent of that equity to use for things like medical expenses, home repairs, visits to see their grandkids or simply day-to-day living expenses. When you take out a reverse mortgage in Canada, you don’t have to choose between staying in the home where you’ve created memories for decades and moving so you can live comfortably in your retirement.

The way a reverse mortgage works is that as long as you live in your home, you’re not required to make any principal or interest payments to repay the amount of equity you’ve used. (Of course, you’ll still be responsible for your property taxes, homeowners’ insurance and maintaining the property in good standing.) The loan becomes due when you move or pass away. If you have heirs, they can pay the outstanding loans from their own funds, or use the funds from the sale of the property.

In order to qualify for a reverse mortgage, you or your spouse must be at least 55 years of age. (However, the older you are, the more money you are likely to qualify for.) The property also needs to be your primary residence, not a vacation home or a rental property. Some mobile homes may not qualify for this type of loan – it is best to check with HomEquity Bank, the only providers of reverse mortgages in Canada.

Reverse mortgages in Canada differ somewhat from similar products offered in the United States.

Reverse mortgage myths debunked

There’s a lot of conflicting and inaccurate information circulating out there about reverse mortgages in Canada. To help you better understand this product, we’ve listed just a few of the more common myths below:

1. Reverse mortgages are a new product.

Reverse mortgages have been available in Canada for more than 25 years.

2. Many people are dissatisfied with their reverse mortgages.

According to a recent survey by HomEquity Bank, 94 percent of reverse mortgage customers would recommend this type of loan to others.

3. Your children will lose the family home.

Your heirs have the opportunity to pay off your reverse mortgage after you pass away and keep the property. Plus, the program guarantees that they will never owe more than the fair market value of the home, should market conditions change.

4. You have to be “old” to get a reverse mortgage.

Reverse mortgages are available to Canadian homeowners age 55 and older. Of course, the older you are when you apply for the loan, the more money you are likely to qualify for.

5. You no longer will own your home.

You will continue to own your home after you receive funds from your reverse mortgage and you will remain on title until you pass away or move out of the house.

5. I’m guaranteed 55 percent of the equity in my home.

Unfortunately, this is not the case. The amount you receive from the reverse mortgage loan will depend on the market value of your home, the location and property type, and the age of the homeowners. The maximum you could receive is 55 percent of the equity in your home.

What IS true about reverse mortgages

1. You have to stay current on property taxes and insurance.

Just as before, you are required to keep paying your taxes and insurance after you receive the money from your reverse mortgage loan.

2. There are no payments required.

As long as the homeowner(s) remain in the home, there are no payments required on either principal or interest of the loan.

3. You can stay in your home as long as you want.

No one is going to force you to move if you take out a reverse mortgage loan. That’s true whether you take out the loan at age 55 or age 80.

So you see, most of the negative things that you may have heard about reverse mortgages in Canada are simply not true. Federal and government agencies do provide some income sources like Canadian Pension Plans, Old Age Security Pension Plans and other benefits to seniors. A reverse mortgage may not be the right solution for every senior homeowner, however, this financial product can help many older Canadians tap into the value they’ve accumulated in their homes and use those funds to boost their monthly income.

This article is the property of HomEquity Bank and has been published with permission.

BILL FRASER
OWNER / MORTGAGE EXPERT

BOOK AN APPOINTMENT CONTACT ME
RECENT POSTS

First-Time Buyer? Here’s How to Tell If You’re Ready

By Bill Fraser • December 16, 2025
Ready to Buy Your First Home? Here’s How to Know for Sure Buying your first home is exciting—but it’s also a major financial decision. So how can you tell if you’re truly ready to take that leap into homeownership? Whether you’re confident or still unsure, these four signs are solid indicators that you’re on the right path: 1. You’ve Got Your Down Payment and Closing Costs in Place To purchase a home in Canada, you’ll need at least 5% of the purchase price as a down payment. In addition, plan for around 1.5% to 2% of the home’s value to cover closing costs like legal fees, insurance, and adjustments. If you’ve managed to save this on your own, that’s a great sign of financial discipline. If you're receiving help from a family member through a gifted down payment , that works too—as long as the paperwork is in order. Either way, having these funds ready shows you’re prepared for the upfront costs of homeownership. 2. Your Credit Profile Tells a Good Story Lenders want to know how you manage debt. Before they approve you for a mortgage, they’ll review your credit history. What they typically like to see: At least two active credit accounts (trade lines) , like a credit card or loan Each with a minimum limit of $2,000 Open and active for at least 2 years Even if your credit isn’t perfect, don’t panic. There may still be options, such as using a co-signer or working on a credit improvement plan with a mortgage expert. 3. Your Income Can Support Homeownership—Comfortably A steady income is essential, but not all income is treated equally. If you’re full-time and past probation , you’re in a strong position. If you’re self-employed, on contract, or rely on variable income like tips or commissions, you’ll generally need a two-year history to qualify. A general rule: housing costs (mortgage, taxes, utilities) should stay under 35% of your gross monthly income . That leaves plenty of room for other living expenses, savings, and—yes—some fun too. 4. You’ve Talked to a Mortgage Professional Let’s be real—there’s a lot of info out there about buying a home. Google searches and TikToks can only take you so far. If you're serious about buying, speaking with a mortgage professional is the most effective next step. Why? Because you'll: Get pre-approved (and know what price range you're working with) Understand your loan options and the qualification process Build a game plan that suits your timeline and financial goals The Bottom Line: Being “ready” to buy a home isn’t just about how much you want it—it’s about being financially prepared, credit-ready, and backed by expert advice. If you’re thinking about homeownership, let’s chat. I’d love to help you understand your options, crunch the numbers, and build a plan that gets you confidently across the finish line—keys in hand.

Mortgages Aren’t One-Size-Fits-All

By Bill Fraser • December 9, 2025
Why the Cheapest Mortgage Isn’t Always the Smartest Move Some things are fine to buy on the cheap. Generic cereal? Sure. Basic airline seat? No problem. A car with roll-down windows? If it gets you where you're going, great. But when it comes to choosing a mortgage? That’s not the time to cut corners. A “no-frills” mortgage might sound appealing with its rock-bottom interest rate, but what’s stripped away to get you that rate can end up costing you far more in the long run. These mortgages often come with severe limitations—restrictions that could hit your wallet hard if life throws you a curveball. Let’s break it down. A typical no-frills mortgage might offer a slightly lower interest rate—maybe 0.10% to 0.20% less. That could save you a few hundred dollars over a few years. But that small upfront saving comes at the cost of flexibility: Breaking your mortgage early? Expect a massive penalty. Want to make extra payments? Often not allowed—or severely restricted. Need to move and take your mortgage with you? Not likely. Thinking about refinancing? Good luck doing that without a financial hit. Most people don’t plan on breaking their mortgage early—but roughly two-thirds of Canadians do, often due to job changes, separations, relocations, or expanding families. That’s why flexibility matters. So why do lenders even offer no-frills mortgages? Because they know the stats. And they know many borrowers chase the lowest rate without asking what’s behind it. Some banks count on that. Their job is to maximize profits. Ours? To help you make an informed, strategic choice. As independent mortgage professionals, we work for you—not a single lender. That means we can compare multiple products from various financial institutions to find the one that actually suits your goals and protects your long-term financial health. Bottom line: Don’t let a shiny low rate distract you from what really matters. A mortgage should fit your life—not the other way around. Have questions? Want to look at your options? I’d be happy to help. Let’s chat.