A Foundation for Retirement Life
A reverse mortgage is a unique type of loan that allows homeowners to borrow against the value of their property without making regular payments. The loan amount is capitalized and added to the loan balance, and no repayment is required as long as the homeowner lives in the residence.
The lender is repaid when the homeowner moves out, usually upon moving, selling the property, or death. However, it's important to note that the lender cannot ask you to sell or leave your residence to repay a reverse mortgage. You must continue to pay property taxes, school taxes, maintenance fees, and insurance.
Interest accumulates on a reverse mortgage and can become expensive. Compound interest applies, meaning the interest on the loan balance grows over time. This is why it's crucial to understand the potential costs involved.
Robert Hogue, Chief Economist at Royal Bank, reported in June 2025 that access to homeownership had generally improved but is still far from the highest level of accessibility that existed before the pandemic. The consistent improvements over the past five quarters have only reversed about a third of the previous national accessibility loss.
It's worth mentioning that a reverse mortgage is not suitable if you want to leave the value of your property as an inheritance. The AMF advises considering what you will have to repay if the value of your debt, including interest, exceeds the value of your property with a reverse mortgage.
The AMF also suggests comparing eligibility criteria, mortgage rates today, opening fees, and penalties for early repayment between different firms that offer reverse mortgages. They also recommend asking yourself if you can obtain a mortgage line of credit at a lower cost instead of a reverse mortgage. The interest rate on a reverse mortgage is generally higher than that of a mortgage line of credit.
According to Statistics Canada's 2023 Financial Security Survey, families who own their residence but do not benefit from an employer pension plan have a median net worth of $914,000. The median net worth of families aged 55 to 64 who own their residence and benefit from an employer pension plan is $1.4 million. In contrast, families who benefit from an employer pension plan but do not own their residence have a median net worth of $359,000. The median net worth of families aged 55 to 64 who are renters and do not benefit from any employer pension plan is $11,900.
The Royal LePage survey suggests that nearly three in ten Canadians who plan to retire in 2025 or 2026 say they will continue to repay their mortgage on their principal residence during their retirement. This indicates that many homeowners still prefer traditional mortgages over reverse mortgages.
It's essential to remember that while reverse mortgages can provide financial relief for some homeowners, they also come with risks and potential financial burdens. It's crucial to thoroughly research and understand the terms before making a decision.
The search results do not contain information about the average mortgage amount offered in a reverse mortgage in Canada. For more detailed information, it's recommended to consult with a financial advisor or a reverse mortgage specialist.
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