Reverse Mortgage Ontario

Reverse Mortgages in Ontario, Canada

You can’t turn a TV on these days without seeing an advert for reverse mortgages, but only around 1.5% of all mortgages taken out in Canada come in this specialized form. So what’s all the hype about? Let’s take a look at why this type of mortgage is becoming more common across Ontario, and how they work.T

When applying for a reverse mortgage, it is important to find an institution that is both trustworthy and highly reviewed, to ensure that you get a reverse mortgage that will work for you.

Smarter Loans offers you a list of Ontario’s top reverse mortgage providers, to help you get the best financing for your situation.

Check out the table of reverse mortgage lenders in Ontario below, and see what they are currently offering. If you’re not sure which lender might work the best for you, we can help you find the right provider.

Quick Links

  1. What Is a Reverse Mortgage?
  2. Who Can Get a Reverse Mortgage in Ontario?
  3. Where Can I Get a Reverse Mortgage in Ontario?
  4. How Do I Get a Reverse Mortgage in Ontario?
  5. How Much Does a Reverse Mortgage Cost in Ontario?
  6. Alternatives to Reverse Mortgages in Ontario
  7. Ontario’s Property Market
  8. Frequently Asked Questions About Reverse Mortgages in Ontario

Frequently Asked Questions About Reverse Mortgages in Ontario

What Is a Reverse Mortgage?

A reverse mortgage is a form of loan that in effect ‘releases’ the equity you have built up in your home. As with normal mortgages, the loan is secured against the property in question, but that’s where the similarities end.

So here’s where it gets interesting: as opposed to a normal loan term, a reverse mortgage lasts the duration of your life, and there are no repayments, for principal or interest, at all during the loan’s life. You do not pay anything for the loan until it terminates. Because of this, it acts exactly reverse to a standard mortgage – accruing value over time, instead of growing smaller.

Who Can Get a Reverse Mortgage in Ontario?

Eligibility for a reverse mortgage is simple:

  • You must be aged 55 or over (if another person is listed on the property title, they must also meet this age requirement) AND
  • You must own your own home in Canada, which is your primary residence

If you meet these basic requirements, you are technically eligible for a reverse mortgage.
However, as with other types of mortgage, financial factors will be taken into account to see whether your chosen lender wishes to lend to you. These factors include:

  • Your age
  • Your home’s location
  • Your home’s condition
  • The amount of equity you have in the property
  • The type of property (e.g. condo, detached home, etc.)
  • The home’s appraised value

Where Can I Get a Reverse Mortgage in Ontario?

At the moment, there are only three reverse mortgage providers across all of Canada:

1. Bloom Finance Company

  • Modern finance company with a mission to provide the simplest way for 55+ Canadians to unlock the wealth they’ve built
  • Operates in all of Ontario
  • Easy online application and process
  • Find out how much you are eligible for here

2. HomeEquity Bank (CHIP)

  • Available throughout Canada
  • Most widely used reverse mortgage provider
  • Private corporation active since 1986
  • Requires the home in question to be valued at more than $150,000

3. Equitable Bank

  • One of Canada’s ten largest banks
  • Reverse mortgages only available in select major urban areas
  • Requires the home in question to be worth more than $250,000
  • Minimum borrowing amount of $25,000

As Ontario’s average house price sits at $594,000, most reverse mortgage applicants will meet the home value requirement for both providers very easily.

How Do I Get a Reverse Mortgage in Ontario?

Getting a reverse mortgage is a fairly easy process. First, you must check you are eligible for one. Then, you must pay off any outstanding debts against the home (including HELOCs and other mortgages). You are allowed to use a reverse mortgage to help pay off these debts, but they must be closed out at the time the reverse mortgage comes into effect, so that the reverse mortgage is the only loan against the property.

Once you have met these basic conditions, you can pick a lender and apply for your reverse mortgage. As with other types of mortgage, there is a fair amount of paperwork to go through, including lots of documentation regarding the property you are mortgaging and your personal finances. Once you are approved, you can choose to take your mortgage funds either as a single lump sum, or split between a small upfront payment and subsequent monthly payments.

How Much Does a Reverse Mortgage Cost in Ontario?

The lack of reverse mortgage providers does mean that there is less competition than in the traditional mortgage market, and so interest rates are higher than you might expect. Rates can vary depending on your circumstances and your chosen mortgage term, but they start from around 3.5% (fixed rate). Variable rates are also available. It’s important to note that interest accrues on your loan as it is received – so opting for monthly payments means less interest over the life of the loan. One way you can make your reverse mortgage a little cheaper is by choosing to repay the loan in partial payments over time.

Alternatives to Reverse Mortgages in Ontario

Not everyone is eligible for, or wants to get, a reverse mortgage, and fortunately there are some other options available to help homeowners benefit from the equity in their homes:

  • HELOCs
  • Cash out refinancing
  • Traditional home equity loans

Ontario’s Property Market

Given the specifics of reverse mortgages, it’s worth knowing a little about Ontario’s property market and its typical homeowner:

  • Average property price in Ontario is $594,000
  • Ontario has the highest property prices of any province
  • 70.1% of Ontarians own their own home – though this ratio is much lower in both Ottawa and Toronto
  • The average mortgage holder in Ontario borrows $363,427 towards the cost of their home
  • The majority of homes in Ontario are owned by people aged 65 or older

Frequently Asked Questions About Reverse Mortgages in Ontario

Where can I get a reverse mortgage in Ontario?

There are only two reverse mortgage providers in Ontario: HomeEquity Bank and Equitable Bank.

Who can get a reverse mortgage in Ontario?

Anyone in Ontario who is 55 years or older and owns their own primary residence can get a reverse mortgage. If you co-own your home, all owners must be 55 or older.

How much can I borrow with a reverse mortgage in Ontario?

You can only borrow up to 55% of your home’s value with a reverse mortgage (which averages $326,700 in Ontario).

How much does a reverse mortgage in Ontario cost?

Reverse mortgage interest rates start at about 3.5%, but do vary depending on the term of the loan and some other factors. As well as this, there will be mortgage origination fees and legal fees associated with the loan.

Why do reverse mortgages have a bad reputation?

There are quite a few misconceptions about reverse mortgages, which often make them seem less preferable to other financing options. Some of these misconceptions include:

  • If you get a reverse mortgage, you no longer own your home.
  • If you get a reverse mortgage, your children will not inherit your home.
  • Reverse mortgages are much more expensive than other types of mortgage.
  • If you don’t make your reverse mortgage payments, you’ll be evicted.
  • You have to be old to get a reverse mortgage.

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