Reverse Mortgages Toronto

Frequently Asked Questions About Reverse Mortgages in Toronto

1. What Is a Reverse Mortgage?
2. Why Do People in Toronto Use Reverse Mortgages?
3. Who Can Get a Reverse Mortgage in Toronto?
4. Reverse Mortgage Rules and Requirements
5. Where Can I Get a Reverse Mortgage in Toronto?
6. Toronto’s Property Market
7. Frequently Asked Questions About Reverse Mortgages in Toronto

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.

As opposed to a normal loan term, a reverse mortgage lasts the duration of your life, and there are no required 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. It also means you can access the value of your home without having to sell it.

Why Do People in Toronto Use Reverse Mortgages?

Reverse mortgages are very useful if you have built up equity in your home, but lack regular income or need a large influx of cash. The funds released via a reverse mortgage are tax free, so there are no payments to worry about until the home is vacated. And there are no restrictions on how you can use funds from a reverse mortgage. Commonly, people use them for:

• Utility bills and other regular expenses
• Travel expenses
• Home renovations
• New purchases
• Medical and care bills
• Paying off other debt
• Bridge financing until a pension kicks in

Who Can Get a Reverse Mortgage in Toronto?

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, 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

Reverse Mortgage Rules and Requirements

Once you have a reverse mortgage on your home, there are some rules you must follow to stay in line with the loan’s stipulations. These are:

• Live the house as your primary residence
• Pay all applicable property taxes
• Maintain insurance on the home
• Keep the home in a good state of repair
• Avoid using the funds from the reverse mortgage for illegal activities

If you fail to meet any of these conditions, you will default on the loan.

Where Can I Get a Reverse Mortgage in Toronto?

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 Ontario, including Toronto, 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 Toronto’s average house price sits at $1,059,200, almost all Toronto reverse mortgage applicants will meet the home value requirement for both providers very easily.

Toronto’s Property Market

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

• Average property price in Toronto is $1,059,200
• Toronto has the lowest level of home ownership in Ontario, at 58.7%
• Toronto as a city averages $1,807 billion in monthly mortgage payments
• The average age of new mortgage holders in Toronto is 38

Frequently Asked Questions About Reverse Mortgages in Toronto

Where can I get a reverse mortgage in Toronto?

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

Who can get a reverse mortgage in Toronto?

Anyone in Toronto 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 Toronto?

You can only borrow up to 55% of your home’s value with a reverse mortgage (which averages $582,560 in Toronto).

How much does a reverse mortgage in Toronto cost?

Reverse mortgage 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. As well as this, there will be mortgage origination fees and legal fees associated with the loan.

How can I save money on my Toronto reverse mortgage?

Interest accrues on your loan as it is received – so opting for monthly payments means less interest over the life of the loan. This is one way you can make your reverse mortgage a little cheaper; another is by repaying the loan in partial payments over time.

Will a reverse mortgage affect my benefits?

No, reverse mortgages do not affect benefits, as income from a reverse mortgage is tax free.

If my spouse dies, what happens to our reverse mortgage?

If you own your home with your spouse, the reverse mortgage is maintained after they pass away. For the reverse mortgage to close, both spouses need to pass away or vacate the home.