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

How to Raise Your Credit Score and Unlock Better Rates

By Bill Fraser • January 20, 2026
Want a Better Credit Score? Here’s What Actually Works Your credit score plays a major role in your ability to qualify for a mortgage—and it directly affects the interest rates and products you’ll be offered. If your goal is to access the best mortgage options on the market, improving your credit is one of the smartest financial moves you can make. Here’s a breakdown of what truly matters—and what you can start doing today to build and maintain a strong credit profile. 1. Always Pay On Time Late payments are the fastest way to damage your credit score—and on-time payments are the most powerful way to boost it. When you borrow money, whether it’s a credit card, car loan, or mortgage, you agree to repay it on a schedule. If you stick to that agreement, lenders reward you with good credit. But if you fall behind, missed payments are reported to credit bureaus and your score takes a hit. A single missed payment over 30 days late can hurt your score. Missed payments beyond 120 days may go to collections—and collections stay on your report for up to six years . Quick tip: Lenders typically report missed payments only if they’re more than 30 days overdue. So if you miss a Friday payment and make it up on Monday, you're probably in the clear—but don't make it a habit. 2. Avoid Taking On Unnecessary Credit Once you have at least two active credit accounts (like a credit card and a car loan), it’s best to pause on applying for more—unless you truly need it. Every time a lender checks your credit, a “hard inquiry” appears on your report. Too many inquiries in a short time can bring your score down slightly. Better idea? If your current lender offers a credit limit increase , take it. Higher available credit (when used responsibly) actually improves your credit utilization ratio, which we’ll get into next. 3. Keep Credit Usage Low How much of your available credit you actually use—also known as credit utilization —is another major factor in your score. Here’s the sweet spot: Aim to use 15–25% of your limit if possible. Never exceed 60% , especially if you plan to apply for a mortgage soon. So, if your credit card limit is $5,000, try to keep your balance under $1,250—and pay it off in full each month. Maxing out your cards or carrying high balances (even if you make the minimum payment) can tank your score. 4. Monitor Your Credit Report About 1 in 5 credit reports contain errors. That’s not a small number—and even a minor mistake could cost you when it’s time to get approved for a mortgage. Check your report at least once a year (or sign up for a monitoring service). Look for: Incorrect balances Accounts you don’t recognize Missed payments you know were paid You can request reports directly from Equifax and TransUnion , Canada’s two national credit bureaus. If something looks off, dispute it right away. 5. Deal with Collections Fast If you spot an account in collections—don’t ignore it. Even small unpaid bills (a leftover phone bill, a missed utility payment) can drag down your score for years. Reach out to the creditor or collection agency and arrange payment as quickly as possible . Once settled, ask for written confirmation and ensure it’s updated on your credit report. 6. Use Your Credit—Don’t Just Hold It Credit cards won’t help your score if you’re not using them. Inactive cards may not report consistently to the credit bureaus—or worse, may be closed due to inactivity. Use your cards at least once every three months. Many people put routine expenses like groceries or gas on their cards and pay them off right away. It’s a simple way to show regular, responsible use. In Summary: Improving your credit score isn’t complicated, but it does take consistency: Pay everything on time Keep balances low Limit new credit applications Monitor your report and handle issues quickly Use your credit regularly Following these principles will steadily increase your creditworthiness—and bring you closer to qualifying for the best mortgage rates available. Ready to review your credit in more detail or start prepping for a mortgage? I’m here to help—reach out anytime!

Don’t Let Collections Derail Your Mortgage Application

By Bill Fraser • January 13, 2026
Can You Get a Mortgage If You Have Collections on Your Credit Report? Short answer? Not easily. Long answer? It depends—and it’s more common (and fixable) than you might think. When it comes to applying for a mortgage, your credit report tells lenders a story. Collections—debts that have been passed to a collection agency because they weren’t paid on time—are big red flags in that story. Regardless of how or why they got there, open collections are going to hurt your chances of getting approved. Let’s break this down. What Exactly Is a Collection? A collection appears on your credit report when a bill goes unpaid for long enough that the lender decides to stop chasing you—and hires a collection agency to do it instead. It doesn’t matter whether it was an unpaid phone bill, a forgotten credit card, or a disputed fine: to a lender, it signals risk. And lenders don’t like risk. Why It Matters to Mortgage Lenders? Lenders use your credit report to gauge how trustworthy you are with borrowed money. If they see you haven’t paid a past debt, especially recently, it suggests you might do the same with a new mortgage—and that’s enough to get your application denied. Even small collections can cause problems. A $32 unpaid utility bill might seem insignificant to you, but to a lender, it’s a red flag waving loudly. But What If I Didn’t Know About the Collection? It happens all the time. You move provinces and miss a final utility charge. Your cell provider sends a bill to an old address. Or maybe the collection is showing in error—credit reports aren’t perfect, and mistakes do happen. Regardless of the reason, the responsibility to resolve it still falls on you. Even if it’s an honest oversight or an error, lenders will expect you to clear it up or prove it’s been paid. And What If I Chose Not to Pay It? Some people intentionally leave certain collections unpaid—maybe they disagree with a charge, or feel a fine is unfair. Here are a few common “moral stand” collections: Disputed phone bills COVID-related fines Traffic tickets Unpaid spousal or child support While you might feel justified, lenders don’t take sides. They’re not interested in why a collection exists—only that it hasn’t been dealt with. And if it’s still active, that could be enough to derail your mortgage application. How Can You Find Out What’s On Your Report? Easy. You can check it yourself through services like Equifax or TransUnion, or you can work with a mortgage advisor to go through a full pre-approval. A pre-approval will quickly uncover any credit issues, including collections—giving you a chance to fix them before you apply for a mortgage. What To Do If You Have Collections Verify: Make sure the collection is accurate. Pay or Dispute: Settle the debt or begin a dispute process if it’s an error. Get Proof: Even if your credit report hasn’t updated yet, documentation showing the debt is paid can be enough for some lenders. Work With a Pro: A mortgage advisor can help you build a strategy and connect you with lenders who offer flexible solutions. Collections are common, but they can absolutely block your path to mortgage financing. Whether you knew about them or not, the best approach is to take action early. If you’d like to find out where you stand—or need help navigating your credit report—I’d be happy to help. Let’s make sure your next mortgage application has the best possible chance of approval.