Mortgage Financing Real 101 Episodes

Mortgage Tips: How to Get a Reverse Mortgage on Your Home?

In this episode of Real Estate 101: The Home Buying & Selling Show, Tracey Brock, Mortgage Broker at Dominion Lending Centres and Sean Russell, Business Development Manager at Home Equity Bank talk about how you can get a reverse mortgage on your home.

What is a Reverse Mortgage?

With the reverse mortgage, the homeowner is able to get cash without resorting to selling their home.

A reverse mortgage is a special kind of loan given only to homeowners and their spouses who have reached 55 years of age or above. This kind of mortgage is secured by the portion of your home’s value that is not under any debt, meaning its equity.

To obtain a reverse mortgage, the client’s home first needs to be appraised for its actual value. Based on this, the client is provided with a “loan to value”, which is determined on three factors:

  1. Client’s age
  2. Location of the home
  3. Type of home

The maximum you can take out of your home with a reverse mortgage is 55%. However, even though the minimum age restriction is 55 years of age, the older the client is, the bigger the percentage he can take. So, for someone who is 55 the percentage will be much smaller than for someone in his 70s or 80s.

How Does Reverse Mortgage Compare to a Home Equity Line of Credit

Although a reverse mortgage is similar to a home equity line of credit, there are some differences. The main among these is that a home equity line of credit is obtained through a bank, while a reverse mortgage is not. This means that, while a bank will look for your income levels and go through your total and gross debt service ratios, a reversed mortgage provider does not look into these.

Since many seniors don’t pass the bank’s process, many banks refer their clients to companies that are providing this kind of mortgage when they cannot accommodate them.

Additionally, credit is also not a factor with this type of mortgage and clients will not be declined based on their score.

Biggest Misconceptions About Reverse Mortgages:

There are a couple of misconceptions regarding a reverse mortgage and we’ll address two of the biggest here:

  • The bank will “own” your home

For one, the bank does not own your home once you get a reverse mortgage. Instead, the bank is has a lien on the property, but that’s it. If the client wants to sell the property, he can just pay the lien and do so.

  • It will “eat away” at your home’s value

Another misconception is that it will “eat away at the property value”. That’s also not true. In fact, the value of your home is growing at some rate. In other words, while the reverse mortgage on which you are not making any payments is growing, at the same time, so does the home value. This means there will still be a lot of value to leave to your beneficiaries.

Watch this episode to learn more about getting a reverse mortgage on your home

For more information on mortgage financing contact:

Tracey Brock


Phone: 416.788.6207

For more information on getting a reverse mortgage contact:

Sean Russel


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