In Canada, a Reverse Mortgage is an option available to seniors in transition, specifically homeowners aged 55 years or older. Senior homeowners may access the equity they have built in their home (up to 40% of the value of the home) in the form of cash, and the lender will register a mortgage of the borrowed amount on the property. The home owner is free to use the cash for home renovations, monthly bill payments, travel, helping children or grandchildren with expenses, etc.
Reverse Mortgages are much easier than a traditional mortgage to qualify for because homeowners are not required to make mortgage payments on this type of loan, and there is no specific income requirement that applicants have to meet. Many seniors in transition who experience a declining income or a major health issue preventing them from working until retirement, turn to this type of mortgage so they can remain in their home and continue to enjoy their lifestyle.
Interest is somewhat higher on this type of mortgage, does accrue over the life of the loan, and typically, repayment of the loan occurs upon the sale of the home.