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The question who is eligible for a reverse mortgage is a good question because unlike a traditional mortgage, reverse mortgage is more restrictive as to who is eligible.

You are eligible for a Reverse Mortgage in Canada if you are a Canadian homeowner and at least 55 years old. If you have a spouse, the spouse must also be 55 years or older to be eligible to become a co-borrower. However, more parameters are considered in order to qualify.

Who is Eligible for a Reverse Mortgage?

In Canada we have two lenders that provide reverse mortgages to seniors. Both lenders have the same age requirement to apply for a reverse mortgage which is 55 years of age, and the maximum equity available from your property is 55% of the appraised value.

What Is The Official Age For Reverse Mortgage?

The age of 55 is a firm number with both lenders, the available amount of equity does vary based on a few factors. Firstly, an appraisal is done by a certified real estate appraiser who works with one of the two lenders providing reverse mortgages. The lender will lend up to a maximum of 55% of the appraised value. They do not take 55% of your current property assessed value as that figure is not always current and up to date.

Once they have determined the value of the property other factors come into play determining how much you will receive in your new Reverse Mortgage. One of the factors is your age, another one is your gender. The older you are the more a reverse mortgage will give you in equity.

Typically, the sweet spot for this product is over the age of 70, if it is a husband and wife applying for a reverse mortgage, both applicants must be at least 55 years of age. The age of the younger spouse will affect the amount available and, also if it a single male will increase the amount as it is proven men live longer than woman, therefore the mortgage would be out longer.

Another factor is the location of the property the type of dwelling on the property and the overall marketability of the property. So let’s start with the location of the property. The location of the property must be in an urban centre, it cannot be a rural property or an agricultural zoned property. It must be the applicants’ owner occupied principle residence and this can either be a single family home, an apartment style condo, a high rise condo or a town home.

The marketability of the property means if the property were to be sold on the market how much interest would this property garner if it was for sale. For example, if it was a single family detached home in good condition, but located on a busy highway this would get a lower score under marketability as it would not a attract a large number of people wanting this property.

If it is a single family home in good condition located near many conveniences and amenities, this would appeal to a larger market. A single family detached home with great marketability is going to net a larger Reverse Mortgage, with of course, taking into consideration the of age of the borrowers, the marital status and gender.

For example, $1,000,000 home in greater Vancouver with a male occupant 70 years of age can possibly get a chip reverse mortgage for 40.9% loan to value, versus a 70 year old female in the same home will garner 38.7% loan to value, and a married couple in the same home will garner approximately 35.6% loan to value. The longer lifespan occurs when you are married, and also having a reverse mortgage for longer nets slightly lower amount.

All of these factors above are placed into the algorithm to generate an amount available for the Reverse
Mortgage.

Reverse Mortgage Benefits

A key benefit of the reverse mortgage is not having the regular mortgage payment or the line of credit interest payment required while they live in the home. Another key benefit is the proceeds from the reverse mortgage is tax free cash and, it does not impact your government issued pension income.

Another benefit of the reverse Mortgage is the interest is compounded semi-annually like a regular mortgage, opposed to a line of credit where the interest if compounded monthly.


With a reverse mortgage who retains the title to the home?
 

A reverse mortgage allows the homeowner to keep their house as long as they pay their property taxes, maintain it, and keep it insured. You will be responsible for the valuation fees, legal fees, and other costs associated with the sale of the land. The borrower retains ownership of the land, including any unused equity, and is never required to leave.

Do I Need A Broker To Buy A House?
 

When using the term “broker” what are we referring to ? The term can be used to refer to a realtor (real estate broker), or a mortgage broker. In either case, the answer is NO, you do not need a broker to buy a house. Just like you do not need a lawyer to go to court and fight your case. Nor do you need a travel agent to book your trip. You can also say the same thing about a mechanic, to change your brakes.

 

What Is Reverse Mortgage?
 

A Reverse Mortgage is a loan product secured by a principle residence enabling the homeowner to access the equity of the home and not make traditional mortgage payments on the loan. According to a recent study, 93% of Canadians want to remain in their home as they age. Access to traditional lending becomes limited for seniors as the income isn’t always there to support the lender guidelines.

How Much Is A Mortgage Advisor?
 

When using the services of a mortgage advisor, when it comes to how they get paid. There are out of pocket costs for the set up and closing of your mortgage and property, however, which you should be aware of well in advance of your closing. But as far as how much a mortgage advisor costs, well we have to back track a little bit and get an understanding of the way that the mortgage industry works.

 

Who is not eligible for a reverse mortgage?
 

You are not eligible for a reverse mortgage if you do not meet the minimum age requirement of 55 years of age, and if you do not own your principle residence with a fair amount of equity in it you will not be eligible for reverse mortgage. It doesn’t mean you won’t ever be eligible just means at this current time you are not eligible.

What Do I Need To See A Mortgage Advisor?
 

This varies depending on the individual policies and procedures. For us, the best place to start is with a 20 minute phone call. You do not need anything. If we get to it, the most skill testing question we will be asking you is what is your SIN. The rest of the information you should have available at the tip of your tongue. During this initial call we are often able to address 99% of your questions or concerns.

 

Can you get a reverse mortgage on a condo in Canada?
 

Another factor is the location of the property the type of dwelling on the property and the overall marketability of the property. So let’s start with the location of the property. The location of the property must be in an urban centre, it cannot be a rural property or an agricultural zoned property. It must be the applicants’ owner occupied principle residence and this can either be a single family home, an apartment style condo, a high rise condo or a town home.

Is It Better To Get A Mortgage From A Bank Or Mortgage Company?
 

This is a great question – is it better to get a mortgage from a bank or mortgage company. There are benefits and short comings with any mortgage product, be it from a mortgage company, or from a bank. The key is, understanding your situation. Being crystal clear on your goals, not only for the short term, but medium term and also the long term. Once you are crystal clear on your goals, you also want understand your demographics.

 

Can a family member be added to a reverse mortgage?
 

Other family members such as your children even though they may be adults they are not eligible to apply for a reverse mortgage or be on title of your reverse mortgage if they do not meet the minimum age requirement of 55. If you happen to pass away and your property has a Reverse Mortgage on it and you have left your property to other family members, they will not be able to assume the Reverse Mortgage as they will not meet the required criteria at this time.

What Makes A Good Mortgage Broker?
 

There are a lot of qualities that can be mentioned here, to determine what makes a good mortgage broker. Like most of these questions, context is important. Above all, the sign of a good mortgage broker, is the mortgage broker who listens to you and tries to understand your goals, and your needs. A good broker, also takes the time to explain his or her role, and set expectations. A good broker will be direct with you, never beat around the bush.

 

If you would like more information or a free consultation to see if a Reverse Mortgage is a fit for you, you can contact me below, and as a Certified Reverse Mortgage Specialist I would be more than happy to review your financing options with you and provide you with Expert Advice to Guide You Home.
Heather Answers the question  - Who is eligible for a reverse mortgage?


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