When choosing a reverse mortgage lender in Canada, it’s essential to consider several key factors to ensure you select a lender that aligns well with your financial needs and offers reliable, ethical services.
- Lender Reputation and Experience: Look for lenders that are well-established and have a strong reputation in the market. In Canada, HomeEquity Bank and Equitable Bank are the primary providers of reverse mortgages. HEB offers its services across all provinces, whereas EQ focuses on specific regions like BC, Alberta, Ontario, and Quebec. Both lenders have different offerings tailored to various needs.
- Interest Rates and Fees: These can vary significantly between lenders. As of early 2024, rates at HEB ranged from 7.59% to 10.13%, depending on whether you choose a fixed or variable rate. Equitable Bank’s rates were slightly lower, ranging from 6.74% to 8.49%. Both lenders charge setup and administrative fees, and there may be penalties for early repayment, so it’s crucial to understand all associated costs.
- Flexible Payout Options: Depending on your financial needs, you might prefer a lump-sum payment or regular installments. Canadian reverse mortgages typically allow you to take up to 55% of your home’s value, but how you receive this amount can vary. Some plans offer a full lump-sum upfront, while others provide an initial advance followed by smaller, scheduled withdrawals.
- Eligibility Requirements: To qualify for a reverse mortgage in Canada the property must be your primary residence, and its appraised value is crucial in determining how much you can borrow. Additionally, some lenders might require you to seek independent legal advice before securing a reverse mortgage. Most lenders require that all titleholders must be at least 55 years old, but there are lenders that have no age restrictions.
- Customer Service and Support: Choosing a lender that offers excellent customer support and clear, transparent information is vital. This can greatly influence your experience, especially when navigating the complexities of reverse mortgages.
Before making a decision, it’s advisable to talk to a licensed mortgage broker, to compare the offerings currently available, considering how their products meet your specific needs and circumstances. Also, explore the potential of a bundle with a HELOC which could allow access to more equity than a standard reverse mortgage alone.
Always consult with a financial advisor to understand the full implications of taking out a reverse mortgage and how it fits into your broader financial plan.
