Reverse Mortgages

Reverse mortgages: what Alberta homeowners should understand

A reverse mortgage is financing secured against your home and is generally intended for homeowners age 55 or older. It can allow eligible homeowners to access part of their home equity without selling the property. Unlike a traditional mortgage, regular mortgage payments are generally not required while the loan remains in good standing. Interest is added to the balance, so the amount owing normally grows over time.

How much can you access?

The amount available is not the same for every homeowner. Lenders may consider the age of the borrowers, the home’s location, condition and appraised value, existing financing and their own lending criteria. Any mortgage or other secured debt that must be discharged can also affect the net amount available.

Costs and long-term equity

Reverse mortgage rates are typically higher than standard mortgage or HELOC rates. Appraisal, legal, setup or other lender costs may also apply. Because interest accumulates, it is important to consider how the balance could affect the equity remaining in the home and the estate later.

Alternatives worth comparing

Depending on income, equity and goals, alternatives may include a traditional refinance, HELOC, home equity loan, second mortgage, downsizing or selling. I can help compare the mortgage-related options so you can see the differences in payment requirements, costs and qualification.

When is the balance repaid?

Repayment requirements depend on the lender and contract. Common repayment events include selling the home, moving out of it, the last borrower dying, or default under the mortgage terms. Legal advice may be required or advisable before proceeding.