First of all, it’s important to understand just exactly what a reverse mortgage is. It is a type of mortgage which allows a homeowner to borrow money against the value of their home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. In Canada any homeowner older than 55 can access up to 50 per cent of their home’s equity.
However, recent reports reveal that should the home owner be required to move out of the home (for assisted living or nursing home care), the mortgage also becomes due. So, dependants cannot remain in the home and assume the reverse mortgage. This can pose serious financial issues of repaying the reverse mortgage and paying the high costs associated with a care facility.