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Everything You Need to Know About Reverse Mortgages

Everything You Need to Know About Reverse Mortgages

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Now more than ever, as homeowners age, they are tapping into their home equity in exchange for cash. It is a process known as a reverse mortgage. Over the years, this type of mortgage loan has grown in popularity among seniors. In January 2020, reverse mortgage debt reached a new record of $4.03 billion, according to data from the Office of the Superintendent of Financial Institutions (OSFI).

The choice to leverage equity instead of leaving it tied up in their property is an attractive option to an increasing number of mature homeowners. Many have a lot of equity in their home. If they’re over 55 years old and potentially mortgage free, it would let them free up some of that equity. For example, they could gift some to a child or grandchild. Something else a reverse mortgage would do is pay them money each month which they could use to enjoy life.

If you’re considering converting to a reverse mortgage, you would likely have a lot of questions. You might want to know the eligibility requirements or how to receive payments. Here are some of the things you need to know about reverse mortgages.

Reverse Mortgages 101

In simple terms, a reverse mortgage is a loan connected to the value of your home. It allows you to convert money from the property’s equity tax-free while still maintaining ownership. Unlike a traditional mortgage which requires monthly payments, the reverse mortgage doesn’t need to be repaid until you decide to move and sell, or the last borrower passes away.

In order to be eligible for a reverse mortgage, you need to be a Canadian homeowner and at least 55 years old. Your spouse must also be 55 years old if they’re on the title of the home.

A home equity line of credit (HELOC) is another popular form of accessing value in your home. It offers between 65% to 80% of the property’s appraised value in some cases. A HELOC is accessible to any homeowner without added age restrictions, but does require proof of a sufficient income and good credit. You’ll also be required to do a stress test to prove you can make payments under higher qualifying interest rates.

For senior homeowners who would prefer simpler eligibility criteria, a reverse mortgage might be the best fit. There are some misconceptions about reverse mortgages, particularly around eating into the equity of your home or the bank taking over your ownership. While more homeowners are beginning to understand reverse mortgages more clearly, it would be a good idea for people to speak with a mortgage professional. He or she would be able to explain the loan in greater detail.

Getting Started

When you’re ready to commit to a reverse mortgage, there will be an initial assessment to determine the home’s value and how much money you could be entitled to. You can expect to be evaluated on the appraised value of the property, its type and condition, your eligibility criteria, and where you live.

Unlike regular mortgage applications, which take a deep dive into your credit history and income, reverse mortgage assessments are generally less labourious. Every document is not scrutinized. The qualification is to make sure you have reasonable credit and some form of income to pay the property taxes.

The two biggest financial institutions that offer reverse mortgage plans in Canada are HomeEquity Bank and Equitable Bank. Your own banking organization may offer options too. Whichever lender you go with, you should anticipate some setup costs, including legal fees for closing or legal advice, appraisal costs, and setup charges.

You’ll still need to pay interest on the reverse mortgage loan, which tends to be higher than regular mortgages. However, you can choose to pay the interest on a monthly or yearly basis, or in full with the principal at any time.

Cash in Hand

If you’re wondering how much you can borrow from a reverse mortgage, it’s like asking how long a piece of string is; it varies. All of the criteria used in your mortgage assessment will determine how much cash you can expect to receive.

For instance, a reverse mortgage with HomeEquity Bank’s Canadian Home Income Plan (CHIP) could let you borrow up to 55% of the home’s value, while Equitable Bank might let you take up to 40%.

When it comes to receiving your money, you might have some flexibility. Some homeowners choose to receive monthly payments, while others opt to take out a lump sum. Still others may opt for some of the money up front and some monthly. Whatever you choose to use the money for is up to you.

This Isn’t Working Out

A reverse mortgage isn’t a forever commitment. If it turns out it just isn’t right for you or you need to break the agreement, it is possible to get out of it. However, there will be a few conditions. As with any mortgage contract, there are penalties for breaking it in the middle of a term. The extent of the penalty varies widely. It is dependent on how long you’ve participated in the mortgage and the reason why you’re breaking it.

If you are three months into it or 10 years into it will have an effect. As well, the reason you’re breaking it could make a difference. Are you moving into a nursing home? Are you moving to another area?

If you sell your home, you’ll be required to repay the amount left on the loan. This also applies when the last borrower dies, in which case the estate would need to pay off the reverse mortgage.

Reverse mortgages are letting more seniors reap the benefits of equity in their home. Like all mortgage products, it is crucial to understand what you are getting into before signing on the dotted line. It may not be for everyone, but may suit your circumstances perfectly. Regardless, you want to have all the information before going ahead.

Get in touch if you have questions!

Things to Consider Before Renewing Your Mortgage

Things to Consider Before Renewing Your Mortgage

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When it comes to renewing your mortgage, many Canadians simply sign their renewal letter without asking any questions, and that can be a costly mistake. As a trusted REALTOR® in the Comox Valley with Royal LePage, Janice Leffler encourages homeowners to take the time to review their options and make lenders compete for their business. By understanding your choices and preparing early, you could save thousands of dollars and secure a mortgage that truly fits your needs.

In this article, Janice outlines the key things to consider before renewing your mortgage.

1. Put a Plan in Place

Don’t wait until the last minute to think about your mortgage renewal. The Canadian Real Estate Association (CREA) recommends reviewing your needs at least four months before your renewal date. Early preparation allows you to compare rates, products, and lenders so you can make an informed decision.

When planning ahead:

  • Research current market trends, interest rates, and lender products.
  • Learn about available options, including reverse mortgages.
  • Assess your financial goals, such as savings, education, or debt consolidation.

The more you know in advance, the better positioned you’ll be to negotiate favourable terms.

2. Do Your Research

Before renewing, take time to understand the various products, features, and rates offered by lenders. Compare both fixed and variable rates and learn how current market conditions may affect your decision.

The Financial Consumer Agency of Canada offers an excellent online resource for up-to-date information about mortgage renewals and common questions.

Your REALTOR® can also provide insight into how your mortgage choices align with your real estate goals, whether you’re staying in your current home or planning a move.

3. Request a Lower Rate

Never assume the rate listed in your renewal letter is the best one available. By law, lenders must send a renewal notice at least 21 days before your term ends — but that doesn’t mean you can’t negotiate.

Ask your current lender for a lower rate or improved terms. Mention any offers from other lenders or mortgage brokers to encourage competition. Lenders often have flexibility, but they won’t offer discounts unless you ask.

4. Consider This a Fresh Start

Your financial situation and the market may have changed significantly since you first secured your mortgage. Job changes, children leaving home, or shifting interest rates can all affect your needs.

Mortgage renewals are a chance to reassess your goals and adjust your mortgage to better suit your current lifestyle. Don’t feel obligated to accept the same product — this is your opportunity to reset and save.

5. Expand Your Horizon

Lenders frequently introduce new mortgage products and incentives that could benefit you, such as:

  • Better prepayment privileges
  • Cash back programs
  • Flexible amortization schedules
  • Accelerated payment options

Exploring new products can open the door to long-term savings and more financial freedom.

6. You Don’t Have to Renew with the Same Lender

Once your mortgage term expires, you’re under no obligation to stay with your existing lender. Shop around and compare offers — other banks or mortgage brokers may offer lower rates or better terms.

Start looking at your options well before your renewal date, so you’re not pressured to accept a less favourable deal at the last minute.

7. Consider Refinancing

Your renewal date can be the perfect time to refinance and access your home’s equity — without paying early repayment penalties.

You might consider refinancing to:

  • Consolidate high-interest debt
  • Fund home renovations
  • Invest in property or other ventures
  • Support a child’s education

Refinancing strategically can help improve your overall financial position and save on interest long-term.

8. Don’t Be Intimidated by Fees

Switching lenders may involve some additional costs, such as:

  • Mortgage discharge and registration fees
  • Transfer or reassignment fees
  • Appraisal costs (if required)

Be upfront with your new lender about any fees — many will cover part or all of the expenses to earn your business.

Even if some costs apply, the long-term savings in interest often outweigh the short-term fees. Always ask before assuming a fee will apply.

9. Be Prepared for a Bit More Work

Renewing with a new lender is considered a new mortgage, which means you’ll need to complete an application, verify your income, and undergo a credit check. While it requires a bit more effort, the potential savings and improved terms can make it worthwhile.

10. Keep Your Payments the Same

If your previous monthly payments were comfortable, consider keeping them at the same amount after renewal — even if you qualify for a lower rate. This strategy helps you pay off your mortgage faster and build long-term financial security.

Remember: letting your mortgage renew automatically without reviewing your options can cost you thousands. Be proactive, plan early, and take control of your renewal process.

Ready to Discuss Your Mortgage Renewal?

Whether you’re renewing, refinancing, or buying your next home in the Comox Valley, Janice Leffler of Royal LePage can help connect you with trusted mortgage professionals and guide you toward the best decision for your situation.

Reach out to Janice today for expert real estate advice and personalized support throughout your homeownership journey.

Credit Scores What Are They and What Affects Them

Credit Scores: What Are They and What Affects Them?

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Understanding how your credit score impacts your ability to qualify for a mortgage is essential for anyone preparing to buy a home in the Comox Valley. As a trusted REALTOR® with Royal LePage, Janice Leffler has helped countless buyers and sellers navigate every step of the real estate journey — from securing financing to finding the right property. In this article, Janice shares valuable insights into how credit scores work, why they matter, and what you can do to improve yours before purchasing a home.

Much like your income and down payment, your credit score is a major financial component when qualifying for a mortgage. It’s one of the key factors lenders evaluate when you apply, making it essential to ensure your score is in good standing before starting the home-buying process.

So, what exactly is a credit score — and what sets a good one apart from a bad one?

What Is a Credit Score and Why Is It Important?

A credit score is an evaluation of how you manage and use credit, including credit cards, loans, mortgages, and other credit facilities. Many people don’t realize that this number is one of the biggest indicators lenders rely on when determining mortgage eligibility.

Your credit score can impact the interest rate you receive, as well as your ability to qualify for certain mortgage products. It carries as much weight as your income or overall affordability.

Generally speaking:

  • A score of 680 or higher gives you access to most mortgage products and competitive interest rates.
  • Scores below this threshold may limit your options.
  • A score of 600 or less may result in higher rates or more restrictive terms due to increased risk.

Your score reflects factors such as your payment history, available credit, and the length of time you’ve held credit accounts. Maintaining a healthy score shows lenders that you’re responsible, reliable, and capable of meeting your payment obligations — all of which influence mortgage approval and pricing.

What Factors Determine My Credit Score?

Several key elements contribute to how your credit score is calculated.

1. Payment History (35%)

Your payment history is the single most influential factor. Consistently paying debts on time is crucial. If you can’t pay off your credit card in full, make at least the minimum payment by the due date.
Collections, missed payments, or bankruptcies can significantly impact your score.

2. Credit Utilization

Avoid maxing out your credit cards. A good rule of thumb is to keep your balance at or below 30% of your credit limit. Lenders see this as a sign of responsible borrowing.

3. Credit Mix and History

Having a mix of credit types (such as credit cards, car loans, or a line of credit) can be beneficial. It shows you can manage different forms of credit responsibly.
The length of your credit history also matters — the longer your track record of timely payments, the better your score will be. Think of it like car insurance: new drivers pay more, while experienced drivers with clean records enjoy lower rates.

4. Credit Inquiries (10%)

Each time a lender checks your credit, it creates an inquiry. While too many inquiries in a short time can lower your score slightly, a single mortgage-related check has minimal impact — typically around 1% or about seven points on a 720 score.
If you’re applying for a mortgage, you shouldn’t be overly concerned about a few inquiries as part of the process.

How Can I Improve My Credit Score?

If you’re unsure how your credit looks, consult a mortgage professional early in the process. They can help you understand where you stand and suggest steps to improve your score before applying for a mortgage.

Common strategies include:

  • Paying down existing credit balances
  • Resolving accounts in collections
  • Avoiding new debt or multiple credit applications
  • Ensuring all bills are paid on time

Improving your credit takes time — scores are updated monthly, so it may take a few billing cycles to see significant improvement. If you need to move forward quickly, a mortgage professional can also help explore specialized lending options based on your current situation.

Your credit score plays a vital role in the mortgage qualification process, influencing not only approval but also the rates and products available to you. By understanding what affects your score and taking proactive steps to strengthen it, you can position yourself for better financial opportunities when purchasing a home.

This article is for information purposes only and is not legal or financial advice or a substitute for professional counsel.

Ready to Take the Next Step?

Whether you’re a first-time buyer or planning your next move in the Comox Valley, understanding your credit score is just one part of preparing for a successful home purchase. With years of experience and deep local market knowledge, Janice Leffler of Royal LePage can help connect you with trusted mortgage professionals and guide you toward homes that fit your budget and lifestyle.

If you’re thinking about buying or selling in the Comox Valley, reach out to Janice Leffler today for expert advice and personalized support every step of the way.