Reverse Mortgage Frequently Asked Questions
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- How does a Reverse Mortgage Work?
- A Reverse Mortgage is the opposite of a traditional mortgage. Reverse mortgages are secured using the equity in your home and require no regular mortgage payments as long as you are living in the home. All of the banks do not require payments, but you do have the option of some prepayment privileges. Differs by lenders, they all have no negative guarantees.
- How much funds would I receive?
- You can receive up to 55% of the value of your home. The amount of funds you are eligible for is calculated based upon a few factors. The main being: Your age, spouses age, property value, and property location. SimpleReverse.ca cares about your situation and presents you with estimates and rates from all lenders.
- Why work with SimpleReverse.ca?
- We work with all of the reverse mortgage lenders in Canada. Why is this important? Most Canadians do not know that there are different interest rates, options, prepayment privileges, loan amounts and programs. There is no additional cost to work with us, the banks partner with us. It is our job to ensure that you know what is available to you, all costs (in Canada each lender has a fee and is the same for all Canadians). We want you to be informed and knowledgeable about your mortgage, no surprises.
- Why get a reverse mortgage?
- There are many reasons why Canadians get reverse mortgages. Some reasons include (but are not limited to): paying off existing debt and mortgages, assisting children with a down payment, home improvement, leisure activities, and travel. Often high net worth clients find it is a better choice to use the tax free reverse funds, rather than cashing out their investments.
- Do I need good credit?
- It's not required ~ reverse mortgages are not credit dependant. The banks just want to ensure you have enough funds to pay property taxes, home insurance, and any other home maintenance fees/costs annually.
- Who is eligible?
- To be eligible for a reverse mortgage you must be at least 55 years of age, and occupy your Canadian property for at least 6 months of the year.
- Do I have to pay taxes on the funds receive?
- No, you do not. Funds from a reverse mortgage are not added to your taxable income, and it does not affect Guaranteed Income Supplement, Old Age Security (OAS), or other government benefits which your may receive.
- How do I receive the funds?
- However you like. You can choose to receive a lump sum, take some now and a monthly balance thereafter, or you can receive scheduled payments. Whatever works best for your wants and needs.
- Will I still own the home?
- Yes you will still own your home. If there are two people on title, you & your spouse or just you can remain in the home forever.
- Are there any requirements after receiving the funds?
- The homeowner is required to continue living in the home, pay their taxes, have property insurance, and maintain the property's condition.
- Is a reverse mortgage a last resort loan?
- Not at all. Many financial professionals recommend a reverse mortgage to supplement monthly income instead of selling or downsizing your home. Another benefit is not depleting your savings.
- What if I already have a existing mortgage?
- You can use a reverse mortgage to pay off an existing mortgage or any other debt you may have.