Reverse Mortgage Scams: What to Watch Out For (and How to Stay Safe)
Reverse mortgages are federally regulated, widely used by Canadian homeowners 55+, and offer real peace of mind in retirement. But unfortunately, like many financial products, they’ve attracted scammers looking to take advantage of seniors.
The good news? Real reverse mortgages from reputable lenders are safe. But knowing how to spot red flags can help you avoid the few bad actors trying to exploit trust.
Here’s what to look out for — and how to stay in control every step of the way.
First, Let’s Be Clear: Reverse Mortgages in Canada Are Legitimate
A Reverse Mortgage, for example, is offered by HomeEquity Bank — a Schedule I federally regulated Canadian bank. It comes with strong borrower protections, including:
A No Negative Equity Guarantee
No monthly payments required
Independent legal advice required before you sign
If you’re working with a licensed professional and a regulated lender, you can feel confident.
So What Are the Scam Tactics to Watch Out For?
Scam 1: Someone Tries to Pressure You to Use a Reverse Mortgage for Their Benefit
This could be a family member, financial "advisor," or even a stranger posing as a real estate or investment consultant.
Red Flag: They encourage you to take out a reverse mortgage quickly and hand over the funds to them — often for a “can’t miss” investment or personal need.
Stay Safe: A reverse mortgage is for your financial wellbeing. Never take one out to benefit someone else without your full understanding and independent legal advice.
Scam 2: Fake Lenders or Unlicensed Brokers
Some fraudsters create websites or use phone calls to pose as reverse mortgage providers — offering deals that sound too good to be true.
Red Flag: Unprofessional emails, high-pressure sales tactics, or asking for upfront fees or personal information before giving you any loan details.
Stay Safe: Only work with licensed Canadian lenders. You can check their status with the Financial Consumer Agency of Canada or ask your bank for recommendations. Legacy Unlocked works only with federally regulated providers.
Scam 3: You’re Told You Can’t Review the Terms or Talk to a Lawyer
Canadian law requires that you receive independent legal advice before finalizing a reverse mortgage agreement. This protects you from signing something you don’t fully understand.
Red Flag: A salesperson tries to rush you, avoids giving you full documents, or says a lawyer isn’t necessary.
Stay Safe: Walk away immediately. Any reputable lender will encourage you to get legal advice — and they’ll wait until you’ve had time to review.
Scam 4: They Claim You’ll Lose Ownership of Your Home
Some scams use fear — claiming you’re signing over the deed or giving up your house.
Red Flag: Language suggesting “shared ownership,” “transferring title,” or giving up rights to your home.
Stay Safe: With a legitimate reverse mortgage in Canada, you retain full ownership of your home. The loan is simply secured against its equity — like a traditional mortgage, but with no monthly payments.
How to Stay Safe When Exploring a Reverse Mortgage
✔ Only work with federally regulated Canadian lenders
✔ Ask for written documentation and review it carefully
✔ Never send money or personal information to someone you haven’t verified
✔ Make sure you receive independent legal advice before signing anything
✔ Don’t let anyone pressure or guilt you into acting quickly
Final Thoughts
Reverse mortgages can be life-changing for the right homeowner — but only when done the right way. At Legacy Unlocked, we’re committed to helping Canadians make confident, informed, and safe decisions.
Remember: education is your best protection. When in doubt, ask questions, take your time, and always trust your instincts.
Not sure who to trust? Book a free consultation with Legacy Unlocked. We’ll walk you through every step — no pressure, no surprises.
