5 Myths About Reverse Mortgages—Debunked!

Reverse mortgages can be a powerful financial tool for Canadian seniors, but they're often misunderstood. Let's clear up the most common myths so you can make an informed decision about whether a reverse mortgage is right for you.

Myth #1: "The Bank Will Own My Home"

THE TRUTH: You maintain full ownership of your home with a reverse mortgage. The lender has a claim against the property (like any mortgage), but you remain the legal owner. You can sell your home, move, or pass it to your heirs whenever you choose.

The lender only gets repaid when you sell the home, move out permanently, or pass away. Any remaining equity after the loan is repaid goes to you or your estate.

Myth #2: "I'll Owe More Than My Home Is Worth"

THE TRUTH: In Canada, reverse mortgages come with a "no negative equity guarantee." This means you will never owe more than your home's fair market value at the time of repayment.

If your loan balance somehow exceeds your home's value (which is rare), the lender absorbs the difference—you or your estate are never responsible for the shortfall.

Myth #3: "My Kids Won't Inherit Anything"

THE TRUTH: Your heirs can inherit your home and any remaining equity. When you pass away, your estate has several options:

• Repay the loan and keep the home
• Sell the home, repay the loan, and keep the remaining equity
• Let the lender sell the home to repay the loan

Many families find that there's still significant equity remaining after the reverse mortgage is repaid, especially in markets where home values have appreciated.

Myth #4: "I Have to Be in Financial Distress to Get One"

THE TRUTH: Reverse mortgages aren't just for seniors in financial crisis. Many use them strategically for:

• Lifestyle enhancement: Travel, hobbies, helping grandchildren
• Home renovations: Aging-in-place modifications, accessibility upgrades
• Healthcare costs: Medical treatments, in-home care
• Tax planning: Reducing taxable income from investments
• Debt consolidation: Eliminating monthly payments and reducing stress

Myth #5: "I Can't Get One If I Still Have a Mortgage"

THE TRUTH: You can get a reverse mortgage even if you still have a traditional mortgage on your home. The reverse mortgage proceeds will first be used to pay off your existing mortgage, and any remaining funds go to you.

This can be especially helpful if you're struggling with mortgage payments or want to eliminate that monthly expense entirely.

Is a Reverse Mortgage Right for You?

If you're 55 or older, own your home, and are looking for ways to access your home equity without selling or making monthly payments, a reverse mortgage might be worth exploring.

The best way to know if it's right for you is to speak with a licensed mortgage professional who can:

• Calculate how much you could access
• Explain all costs upfront
• Compare it to other options like refinancing or a HELOC
• Answer all your questions with no pressure

About the Author: Ragini is a FSRA-licensed mortgage broker with Blue Key Mortgage, powered by BRX Mortgage. With over 15 years of experience, she specializes in helping Ontario seniors navigate reverse mortgages and other home equity solutions.