Reverse mortgages have much higher interest rates than traditional mortgages
False. While interest rates on a reverse mortgage are slightly higher than a traditional mortgage, the difference is not excessive. Many retired Canadians are choosing reverse mortgages over traditional mortgages. Most likely they would struggle to qualify for a traditional mortgage and making monthly mortgage payments is simply not an option.
You Can’t Pass on Your Home
False. Another myth is that your children will not be able to inherit your home if you have a reverse mortgage. This is not the case. As with a regular mortgage, your heirs will always have the option of keeping the property by paying off your mortgage (regular or reverse) after you pass away.
Plus, with a “No Negative Equity Guarantee”, if the mortgage amount due is more than the gross proceeds from the sale of the property, the lender will cover the difference between the sale price and the loan amount. You will never owe more than the fair market value of the home.