🏡 Understanding Reverse Mortgages: Unlocking Your Home’s Capital

A reverse mortgage is a specialized loan secured against the value of your home. It provides you with the ability to release the capital in your home without having to sell or move.

The money you receive is tax-free and can be used for any purpose you wish. It can also be used as financing when purchasing a new property.

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Key Features & How a Reverse Mortgage Works

The defining characteristic of a reverse mortgage is the lack of regular principal repayment.

• No Mandatory Payments: You are not required to make monthly principal payments. You can choose to pay the interest only each month, or no payments at all.
• Interest Accrual: The interest accrues and is added to the original loan balance over time. As a result, the outstanding balance grows as interest is accumulated.
• Repayment Trigger: The loan is repaid when the homeowner:
  • Moves out of the home.
  • Sells the home.
  • Passes away.

Who is a Reverse Mortgage For?

Because it eliminates the stress of regular payments, a reverse mortgage is an attractive option for anyone who:

• Is 55 years of age or older.
• Wants to stay in their current home.
• Is on a limited or fixed income.
• Has a significant equity position in their home.

It can also provide peace of mind and necessary financing during periods of debilitating or prolonged illness, or act as a bridge until you are ready to downsize.

Interest Rates and Fees

Because reverse mortgages are not qualified with minimum income requirements like traditional “A” mortgages, they typically have:

• Higher interest rates than typical “A” mortgage rates.
• Fees associated with setting up the mortgage.

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🌟 Lender Spotlight: Bloom Finance Company – SafeRate Reverse Mortgage

Bloom Finance Company’s product, SafeRate, is a relatively new offering that provides distinct features designed for predictability and flexibility.

SafeRate Key Features

Feature	Details
Interest Rate	Lifetime fixed rate. (As of Dec 14th, 2025, the rate is 6.69%).
Prepayments	You are allowed to make annual lump sum payments of up to 10% of the balance.
Interest-Only Option	You can set up a schedule for full or partial interest-only payments. This option has no setup fees, is arranged via PAD, and can be started or stopped as needed.
Right to Move (Downsizing)	You can downsize and port your Loan-to-Value (LTV) ratio up to 90% LTV on the new purchase. There is no penalty or fee on any balance repaid over the ported amount.
Right to Move (Upsizing)	You can port your existing balance with no penalty or fees.

Set Up Costs

The associated costs for setting up the SafeRate mortgage are approximately:

• Appraisal: $350
• Processing Fee (Includes lender legal, registration, title insurance): $1,650
• Legal / Independent Legal Advice (Your legal fees): Approximately $1,000 to $1,500

Compassionate Penalty Waivers

Bloom’s SafeRate offers enhanced penalty waivers for sensitive life events:

• Borrower Death: No penalty to payout within 3 years of the death of the first borrower.
• Long-Term Care: No penalty if the last borrower moves into long-term care.
• Estate Settlement: No penalty on the death of the last borrower, and the family is granted 365 days (double the industry standard) to settle the estate.

Early Payout Penalty Structure

If you need to pay off the mortgage early outside of a compassionate waiver event:

Repayment Year	Penalty Structure
Year 1	8%
Year 2	7%
Year 3	6%
Year 4	5%
Year 5	4%
Years 6 through 10	3 months’ interest

📞 Post-Funding Customer Service

For customer service after the funding of your mortgage:

• A statement for the mortgage is issued annually.
• You can contact them directly by calling their toll-free number: 1-866-882-5666, option #2.

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🌟 Lender Spotlight: HomeEquity Bank (CHIP Reverse Mortgage)

HomeEquity Bank is a well-known lender in the reverse mortgage space, offering products like the CHIP (Canadian Home Income Plan) Reverse Mortgage and the Income Advantage Mortgage.

Product Options & Benefits

Product	How Funds are Received	Key Details
CHIP Reverse Mortgage	Single, up-front Lump-Sum Advance	Funds are provided as one tax-free lump sum.
Income Advantage	Funds are received as a Monthly Payment	Requires a minimum initial advance of $20,000. Minimum monthly payment is $1,000 (or $3,000 per quarter).

Eligibility Requirements

To qualify for HomeEquity Bank’s reverse mortgages:

• You must be a Canadian homeowner.
• You must be Age 55 or older.
• You must own your home.
• The property must be your primary residence.
• If there are two spouses on title, both must be at least 55.

Other Interesting Facts

• The reverse mortgage remains in force even if one spouse passes away.
• Bed & Breakfast properties are considered on an exception basis if owner-occupied.
• The mortgage can be registered interalia (registered on multiple properties) up to 3 properties, as long as one of them is your primary residence.

Prepayments and Penalties

Feature	Details
Prepayments	Prepayments of up to 10% of the outstanding principal and interest are available within 30 days of each anniversary date without penalty.
Penalty After 5 Years	After 5 years, there is no prepayment charge if payment is made within 30 days of the reset date.
Early Payout Penalty	Year 1: 5% of outstanding balance. Year 2: 4% of outstanding balance. Year 3: 3% of outstanding balance.
Penalty After 3 Years	After the 3rd anniversary, the penalty is 3 months’ interest.
Penalty Waiver	After the 5th anniversary, the penalty can be waived with 3 months’ written notice.

Costs & Rates (Subject to Change)

• Initial Set Up Costs: Initial setup costs, including appraisal, administration, and legal fees, are approximately $3,000.00.
• Independent Legal Advice (ILA) is required.
• Available Interest Rates (Indicative):
  • 6-month: 6.99%
  • 1-year: 6.99% – 7.59%
  • 3-year: 6.94% – 7.54%
  • 5-year: 6.64% – 7.24%
  • Variable: Prime + 2.66% to Prime + 2.91%
  • (The available rate will depend on the location of the property.)