5 Myths About Reverse Mortgages (And the Truth Behind Them)
Reverse mortgages are becoming increasingly popular among Canadian homeowners 55+, but misconceptions still surround them. These myths can prevent people from exploring an option that could bring significant peace of mind and financial freedom in retirement.
At Legacy Unlocked, we believe in transparency and education. Let’s clear up some of the biggest myths about reverse mortgages in Canada so you can make informed decisions.
Myth #1: “I’ll lose ownership of my home.”
Truth: You remain the legal owner of your home.
With a reverse mortgage like the CHIP Reverse Mortgage, you retain full ownership of your property. You are simply borrowing against the equity in your home. As long as you continue to live in the home, pay property taxes, and maintain the property, you can stay in it for life.
Myth #2: “My children will inherit my debt.”
Truth: Reverse mortgages are designed to protect your heirs.
When you pass away or sell the home, the loan is repaid from the proceeds of the sale. Anything remaining goes to your estate or heirs. Thanks to the “No Negative Equity Guarantee,” your estate will never owe more than the fair market value of the home at the time it’s sold. Your family is protected from inheriting debt from a reverse mortgage.
Myth #3: “It’s just a last resort for people who are out of money.”
Truth: Reverse mortgages are a strategic retirement tool.
Many financially stable Canadians use reverse mortgages to increase retirement income, delay RRSP withdrawals, fund home renovations, or support adult children with their own home purchases. It’s not just for those in financial hardship—it’s about financial flexibility.
Myth #4: “Reverse mortgages are too expensive.”
Truth: Like any financial product, costs exist—but they are clear and manageable.
There are closing costs and interest, but there are no monthly payments. The interest accumulates over time and is only paid when the loan becomes due (sale of the home or passing away). Many seniors find the convenience and freedom well worth the cost, especially with rising living expenses.
Myth #5: “You can’t get a reverse mortgage if you already have a mortgage.”
Truth: You can still qualify.
If you have an existing mortgage, you may be able to use a reverse mortgage to pay it off. This can eliminate monthly mortgage payments entirely and improve cash flow in retirement. Many homeowners choose this option to ease financial stress.
Final Thoughts
Myths often come from misunderstandings or outdated information. Reverse mortgages in Canada are well-regulated, secure, and offer a flexible way for homeowners 55+ to make the most of their retirement.
Still have questions? Let’s talk it through — we’re here to help you understand your options with clarity and care. Ready to learn more? Check your eligibility today or speak to one of our mortgage advisors.
