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Reverse Mortgages in Ontario

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What is a Reverse Mortgage?

Unlike a conventional mortgage where you make scheduled mortgage repayments to the bank in exchange for the equity in your house, a reverse mortgage is a type of loan that is available to property owners above the age of 55, and it is secured against the available in equity in your house. This type of mortgage is payment-free as the borrower does not need to make any monthly payment to repay the principal loan amount as mentioned earlier. The property owner can continue to stay in the house as long as they choose to stay there. The mortgage only becomes due if the borrower decides to sell or move out. At this particular point, the principal amount, including all of the interest accrued will become due. However, the amount can never exceed the market value of the house and it can be deducted from sale proceeds, or can be repaid in the form of a lump sum payment. The only payment the borrower is expected to make during their reverse mortgage term is making sure the property tax is up to date, as well as fire and home insurance. Based on the policy, the payment terms can be monthly or annually. If there is any secondary financing behind the reverse mortgage, then the borrower is required to make the monthly payment for the second mortgage.

A reverse mortgage is a type of home equity loan where no monthly payment is needed to be made. It can be a major advantage for borrowers who opt for this type of mortgage. Imagine how stress-free your life can be if you didn’t have to make monthly mortgage payments. It wouldn’t affect your cash flow. For more information about reverse mortgages in Ontario, please do not hesitate to speak to our team today.

Features of a reverse mortgage:

Tax-free money

The funds for this type of mortgage are tax-free and it can be a one-time payment or a combination of both. The money does not need to be repaid until you move, sell or die.

Maintain ownership of your home

When you take out a reverse mortgage, you retain the title of your property. The mortgage simply allows the borrower to take into the equity that has been built up in their home.

Use the funds in any way you wish

Since the borrower does not need to pay back this amount until they die or move out, they can use the funds in any way they wish such as:

  • Have an additional source of income in retirement

  • Make home improvements

  • Pay for in-home care

  • Pay off outstanding debt

  • Support your loved ones

Keep all the remaining home equity

If the loan balance is larger than the sale price of the house, then the borrower would be required to pay the amount for what it sells.

Interest rates

Only the lump sum reverse mortgage gives out all the proceeds once the loan closes, and the interest rate is fixed. The other options have adjustable interest rates, and it makes total sense if you are borrowing money over many years.

Features of a reverse mortgage:
How does a reverse mortgage work?

How does a reverse mortgage work?

The aim of a reverse mortgage is to take advantage of the equity available in your property without the borrower needing to make scheduled mortgage payments. However, if there are any loans tied to the house, they must be paid off beforehand before the borrower applies for a reverse mortgage. The sum the borrower receives from the reverse mortgage is tax-free and can be used for home improvements or renovations. It is a useful mortgage product for older property owners that have a large amount of equity in their homes. The funds they receive from a reverse mortgage can be used to supplement or entirely replace other income sources. Additionally, the funds will not affect old-age security or the guaranteed income supplement benefits of the borrower. However, the interest rates are usually higher than your regular mortgage rates, and over time, it means that the equity in your property can decrease. In the event you die, your estate will need to repay the reverse mortgage. For more details on reverse mortgages in Ontario, Canada, get in touch with the team at Mortgage Loan Ontario.

The basic qualification and eligibility requirements for reverse mortgages in Ontario

A borrower is eligible to borrow up to 55% of the built-up equity in their home through a reverse mortgage if they meet the below-mentioned eligibility requirements:

  • They are a Canadian citizen aged 55 or older

  • The property is either detached, semi-detached, condominium or a townhouse.

  • The borrower will need to pay taxes on the property and homeowners insurance and maintain the house.

  • All the property titleholders apply as joint borrowers with you.

  • The house is their primary residence. The borrower has to be living in the property for at least six months minimum.

eligibility requirements for reverse mortgages in Ontario
Is a bridge loan right for you?

Apply for a reverse mortgage today from Mortgage Loan Ontario

If you are looking to renovate your home and help in utilizing the built-up equity in your property, get in touch with the team at Mortgage Loan Ontario today for reverse mortgages in Ontario, Canada. We will be more than happy to address any queries that you may have.

Need expert advice on reverse mortgages in Ontario? Call Mortgage Loan Ontario today at 1 416-262-8937

Is a reverse mortgage the right option for you?

A reverse mortgage may sound a lot like a Home Equity Line of Credit (HELOC) as it also offers a lump sum line of credit that you can access for home renovations and much more. However, unlike a HELOC, the borrower does not need to have a good income source or great credit history to qualify, and the best part is you won’t be making any loan payments to your primary residence. It is ideal for those borrowers who:


Do not wish to make monthly loan payments


Cannot afford a monthly loan payment


Cannot qualify for a home equity loan or mortgage refinance because of their credit score or income level.

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Frequently Asked Questions

Can I apply for a reverse mortgage if I have an existing mortgage?

Yes, you can apply for a reverse mortgage even if you still have an existing mortgage. However, you have to ensure you are making the monthly mortgage payments on that loan or have paid off the loan amount completely to be eligible.

What types of property qualify for a reverse mortgage?

The property that you can qualify for a reverse mortgage are detached, semi-detached,condominium or a townhouse.

What are the payment options for a reverse mortgage?

You can either choose to receive the funds of a reverse mortgage all at once as a lump sum, or it can be fixed monthly payments for as long as you like, or as a line of credit.

How does interest work on a reverse mortgage?

With a reverse mortgage, the borrower is charged interest only on the sale proceeds. The interest rates can either be fixed or variable to suit your specific needs.

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