April 22, 2025
In this episode, Marko Gelo and Nicole Buitenkant (of Home Equity Bank) discuss Reverse Mortgages. Here’s a summary of the discussion:
What Is a Reverse Mortgage?
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A reverse mortgage lets homeowners 55+ tap into their home equity without selling
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No monthly mortgage payments required
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Interest is compounded semi-annually and added to the mortgage balance, causing the balance to increase over time
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HomeEquity Bank is currently the only national provider in Canada offering this solution
Eligibility & Basics
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Must be 55 years or older
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Property must be the primary residence
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Loan amounts are based on property value, location, and age of the applicant(s)
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Income and credit scores are not part of the qualification process
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Funds can be received as a lump sum, in installments, or a mix of both
Protections & Ownership
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The homeowner retains ownership of the property
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HomeEquity Bank registers a standard mortgage charge on title — not a transfer of ownership
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Borrowers or their estates will never owe more than the fair market value of the home thanks to a No Negative Equity Guarantee
What Happens Upon Death or Moving?
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The mortgage continues if one spouse passes away (right of survivorship)
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When the home is sold or both owners leave the home (e.g. move to care), the reverse mortgage is paid off like a regular mortgage
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If moving to care, break penalties are reduced by 50%
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After the last homeowner passes away, break penalties are waived
Interest & Prepayment Options
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Monthly interest payments are optional, based on budget
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Up to 10% of the original principal can be paid annually on the anniversary date without penalty
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In the 5th year (plus 30 days), homeowners can make a lump sum of any amount
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A short-term open reverse mortgage is available for those needing flexibility — no penalties for early repayment
Prepayment Penalties
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Penalties only apply within the first 5 years:
Year 1: 5% of balance
Year 2: 4% of balance
Year 3: 3% of balance
After Year 3: Only 3 months’ interest of balance
After Year 5: Give 3 months’ notice to avoid paying any penalty
Full transparency upfront is key to managing expectations
Common Misconceptions
Myth: The bank owns your home.
Fact: You remain the legal owner. HomeEquity Bank is only registered as a lender on title
Myth: You’ll leave debt for your children
Fact: There’s a written guarantee that neither the borrower nor their estate will owe more than the home’s fair market value
Why This Product Is Gaining Popularity
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Canada now has more 55-year-olds than 19-year-olds — aging demographics are driving demand
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Reverse mortgages are a viable tool for intergenerational wealth transfer — helping adult children buy homes while their parents are still living
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Many seniors are cash-poor but equity-rich, and traditional pensions/income sources aren’t enough
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Reverse mortgages can extend the lifespan of retirement plans that were designed decades ago
Family Involvement Is Encouraged
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The decision process often involves adult children
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Families usually start skeptical (“What’s the catch?”), but become supportive after learning how the product works
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It becomes a shared family solution with full understanding and buy-in.
Final Thoughts
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Education is crucial — both brokers and borrowers need to understand how the product works
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Financial planners may not have accounted for today’s longevity and inflation — reverse mortgages can fill the gap
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Qualifying is simple: if you’re 55+ and own your home, you’re likely eligible
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The process is about empowering seniors to make informed financial choices that align with their goals.
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604-800-9593 cell/text | 403-606-3751 cell/text | Schedule A Call | WhatsApp | Marko’s App | mortgages@markogelo.ca
