3 Misconceptions About Reverse Mortgages in Canada

Sabeena Bubber • March 2, 2018

Before having a conversation about the misconceptions of reverse mortgages in Canada, it's probably a good idea to outline some of their features. If you're a senior Canadian homeowner 55+, a reverse mortgage is an excellent financial solution designed specifically for you. A reverse mortgage will allow you to access up to 55% of the value of your home, maintain ownership of your home; you never have to move or sell, you won't be required to make any payments, and you can receive your tax-free cash over time or in one lump sum. 

So although this seems pretty straightforward, there's a lot of misinformation floating around about reverse mortgages. Let me provide clarity to the following 3 misconceptions. 

The bank owns your home. 

In a recent survey, it came out that over 50% of Canadians homeowners 65+ believed that the bank owns your home once you’ve taken a reverse mortgage. This is simply not true! A reverse mortgage is registered on title exactly the same as any other mortgage lender would register their interest. However, the main difference with a reverse mortgage is the flexibility of not having to make payments on the mortgage. The idea that you sign over your house to the bank, that they somehow own it and rent to you is pure fiction. 

You can owe more than your home is worth.

As you aren't required to make any payments on a reverse mortgage, the interest charged accumulates and is added to the balance owing. There are three things that trigger the mortgage to become due, the death of the last homeowner, or if you decide to move or sell the property.

But what if the market crashes, and your property isn't worth what it once was, what if you end up owing more than what the house is worth? Good question, unlike a traditional mortgage, a reverse mortgage is a non-recourse debt. Non-recourse means if a borrower defaults on the loan, they cannot seek any further compensation from the borrower, even if the collateral asset does not fully cover the full value of the loan. 

This means that you or your estate will never be responsible for paying back more than the fair market value of the home. There is no risk in taking a reverse mortgage. 

A reverse mortgage is a mortgage of last resort. 

This misconception reflects old school thinking. In a world where you have a guaranteed pension, or huge nest egg (outside the equity in your home), you might have more options available to you. But if you're looking for options... options that don't involve using guaranteed income or using your retirement savings, a reverse mortgage provides you with choice.

For most Canadians, the equity in their home makes up the majority of their wealth, a reverse mortgage allows you to access that equity with no income qualification, no credit check, and doesn't require you to make any payments.

If you'd like to talk more about your financial situation, contact me anytime. Sabeena Bubber at 604-862- 8526 or email me directly at sabeena@xeva.ca.

SHARE THIS ARTICLE

RECENT POSTS

Sabeena and family at Canadian Mortgage Hall Of Fame

A Night I’ll Always Carry With Me

By Sabeena Bubber • October 24, 2026
Sabeena Bubber reflects on her Canadian Mortgage Hall of Fame induction, the journey behind it, and the people who made this meaningful milestone possible.

How Property Type and Condition Influence Mortgage Financing

By Sabeena Bubber • October 21, 2026
Why the Property Matters When You’re Qualifying for a Mortgage When qualifying for a mortgage, lenders typically look at four core areas: Income Credit Down payment or equity The property itself Most buyers focus heavily on income, credit, and savings—and for good reason. But even if those boxes are checked, the property can still determine whether a mortgage is approved. Why Lenders Care About the Property From a lender’s perspective, the property is the collateral for the mortgage. In the unlikely event of default, they need to know the home can be sold quickly and at fair market value to recover their funds. Because of this, lenders are careful about the condition, value, and marketability of any property they finance. Homes that are in poor repair, unconventional, or overpriced can raise red flags—even when the borrower is well qualified. Appraisals Are Always Part of the Process Every mortgage requires an appraisal to confirm value. Insured mortgages (through CMHC, Sagen, or Canada Guaranty) often use an automated valuation model completed online. Conventional mortgages typically require a full, on-site appraisal by a certified appraiser. This appraisal is not optional and happens after an offer is accepted—not at the pre-approval stage. Why Pre-Approvals Aren’t a Guarantee A pre-approval is a great first step, but it only assesses you, not the property. Once you’ve made an offer, the lender must approve the specific home you’re buying. Understanding this upfront helps avoid surprises and confusion later in the process. The Risk of Buying Without a Financing Condition In competitive markets, buyers sometimes remove financing conditions to strengthen their offer. However, this comes with risk. If the appraisal comes back low—or the lender is concerned about the property’s condition—you could be denied financing after the offer is firm. In that scenario, your deposit may be at risk. Buying a Home That Needs Work If you’re considering a property that isn’t in perfect condition, there are solutions. A purchase plus improvements program allows you to buy a home and include renovation costs in your mortgage. The process is structured and requires planning, but it can be an excellent way to turn a fixer-upper into a great long-term investment. Final Thoughts Mortgage approval isn’t based solely on your finances—the property matters just as much. Knowing this ahead of time helps you make smarter offers, reduce risk, and plan more effectively. If you’re buying a property that needs work or want clarity on how a lender may view a specific home, feel free to reach out. I’d be happy to walk you through your options and help you plan with confidence.

How to Maximize Your Mortgage Renewal Opportunity

By Sabeena Bubber • October 14, 2026
Your Lender Is Not Obligated to Renew Your Mortgage Many homeowners assume that if they’ve made every mortgage payment on time, their lender is automatically required to renew their mortgage at the end of the term. That’s a common belief—but it isn’t true. When you sign a mortgage, you’re agreeing to a contract for a specific term . Once that term ends, the lender has the legal right to either renew the mortgage or call the loan . There is no obligation to offer a renewal. In practice, most lenders do renew mortgages—but certain situations can prevent that from happening. Reasons a Lender May Decline to Renew A lender may choose not to renew if: Mortgage payments were missed during the term A bankruptcy or consumer proposal has occurred There is a separation or divorce Employment or income has changed A borrower on the mortgage has passed away The lender no longer prefers the property’s location or market The lender is no longer licensed to lend in Canada Even one of these factors can change how a lender views the risk. Why This Matters Because renewal is not guaranteed, waiting until the last minute can put you in a difficult position. Understanding this reality early gives you time and control. How to Protect Yourself at Renewal The best approach is to be proactive. Ideally, you should begin reviewing your options 120 days before your mortgage term ends . This gives you enough time to explore alternatives and make informed decisions—rather than reacting under pressure. Even if your current lender offers a renewal, that’s just one option , not automatically the best one. The lender that was right for you years ago may no longer offer the most competitive rate, terms, or flexibility today. The goal at renewal isn’t convenience—it’s reducing your total cost of borrowing and choosing terms that align with your current situation. Why Work With an Independent Mortgage Professional Working with an independent mortgage professional ensures someone is advocating for you , not the lender. Instead of being limited to one set of products, you can compare options across multiple lenders and choose the solution that best protects your interests. Final Thoughts Whether your lender is offering a renewal or not, the smartest move is to review all your options before signing anything. If your mortgage is coming up for renewal—or if you want to plan ahead—feel free to connect anytime. I’d be happy to help you protect your options and make a confident decision.