REVERSE MORTGAGES — COMMON MISCONCEPTIONS
- johnathanmcquoid
- Jan 18
- 2 min read
Reverse mortgages often get a bad reputation, mostly because of outdated information or confusion with U.S. programs.
In Canada, reverse mortgages follow strict federal guidelines and offer real flexibility for homeowners aged 55+.
Here are the most common misconceptions — and the real facts 👇
💡 What is a reverse mortgage?
It’s a mortgage that allows you to access a portion of your home equity — with no required monthly payments as long as at least one homeowner lives in the property.
Payments are optional.
Interest simply accumulates until you sell, move, or the home transfers to your estate.
1️⃣ “The bank will own my house.”
False.
You stay on title.
You keep ownership and control of the property.
You cannot be forced to sell or move out as long as you continue to live in the home and maintain basic property obligations.
2️⃣ “I’ll lose all my equity.”
Not true.
In Canada you can typically access up to 55% of your home’s value depending on age, home type, and location.
Most clients borrow far less — closer to 30–40%, leaving significant equity untouched.
If your home continues to appreciate over time, your equity often grows even while using the product.
3️⃣ “Reverse mortgages are too expensive.”
The setup costs are similar to a regular mortgage:
✔️ appraisal
✔️ legal fees
✔️ standard closing costs
There are no monthly payments required, and you only pay interest on the amount you actually borrow.
4️⃣ “A line of credit is better.”
A HELOC is a good option only if you have:
✔️ strong credit
✔️ stable income
✔️ ability to make monthly payments
Many retirees don’t qualify under today’s stricter lending rules — which is why a reverse mortgage can be a more realistic option.
5️⃣ “The penalties are huge and you can’t get out.”
Reverse mortgages are best suited for homeowners planning to stay in the home for 3+ years.
However:
✔️ penalties are waived upon death of the last borrower
✔️ penalties are reduced by 50% if moving into a care facility
You can exit early — it just depends on timing and balance.
6️⃣ “I don’t need a large lump sum, so it’s pointless.”
Not anymore.
Many lenders now offer flexible programs allowing you to:
✔️ take a lump sum
✔️ take smaller scheduled monthly deposits
✔️ access funds only as needed
You only pay interest on what you actually draw.
💬 Final Thought
Reverse mortgages are not for everyone — but they can be a powerful financial tool for the right homeowner in the right situation.
If you’re 55+ and curious whether this could help with retirement income, debt consolidation, or cash-flow support, message The Frontline Mortgage Group. We’ll review your options and guide you through the numbers without any pressure. 💬