They want to know about upfront fees, hidden fees, out-of-pocket expenses, and of course what fees and costs are recoupable and which are not.
In this article, I’m going to clearly define each and every fee, cost, and expense associated with a Canadian Reverse Mortgage.
How much does a Reverse Mortgage cost?
As I hinted at above, there are a couple different types of fees/costs involved in securing your Reverse Mortgage here in Canada. These can be broken up into two distinct categories: Upfront/out-of-pocket expenses, and expenses that are deducted from the monies received in your Reverse Mortgage payout.
1. Upfront, out-of-pocket expenses associated with a Reverse Mortgage
Unlike most financial products, Reverse Mortgages have no upfront fees, however, as with any home equity take out, the loan amount is determined based on a few criteria, one being the current market value of your home at the time of the application for your Reverse Mortgage. As a result, a home appraisal is required (at the homeowners expense).
a. Home Appraisal ($400)
In order to obtain a fair and unbiased value of your home, an independent, certified, and bondable home inspection agent will need to view your home.
The cost for a home inspection typically falls in the range of $200-$400 depending on your province, city, and home location.
You have to remember this deal is also a investment for the lender, so like you they too want to make sure that not only is this beneficial to you, a valued partner, but also to them.
The good news is this is the ONLY up front cost for you to secure the amazing benefits you will receive from your Reverse Mortgage.
One thing to remember; if you have your home inspection and then decide not to proceed with the Reverse Mortgage the cost of the inspection is NOT refundable.
2. Reverse Mortgage fees that are deducted from your payout
a. Independent Legal Advice ($400 – $1000)
Due to current Canadian law, and required by our Federal/Provincial government, any mortgage transaction is required to have a lawyer involved in the process.
The average cost to receive third party legal advice ranges form $300-$500. This cost is often deducted directly from the proceeds you will receive from your Reverse Mortgage payout/payments.
We are happy to provide to you a list of reputable lawyers and law firms who are experienced in Reverse Mortgages.
b. Closing and Administrative Costs ($1,495)
As with any financial and/or real estate transaction, there are certain legal and administrative requirements that must be met. Reverse Mortgages are no different.
Included in this fee are;
- Title search
- Title insurance
- Mortgage registration
Once again, these are government required actions that must be done during any type of mortgage transaction.
The average cost for this is around $1500, but can vary depending on the province.
Remember, this fee is also deducted from the monies received from your Reverse Mortgage payout, meaning no out-of-pocket expenses for you to worry about.
At the end of the day, Reverse Mortgages in Canada are structured in such a way that almost anyone who qualifies can quickly, easily, and affordably secure the funds required to begin living a better life using the equity they’ve built up in their homes through a Reverse Mortgage.[cp_modal display=”inline” id=”cp_id_6911e”][/cp_modal]