Reverse mortgage costs and fees: what you actually pay
The interest rate is one cost. The setup costs are another, and they are the ones people are surprised by, because they come off the top of the money you receive.
Here is every cost involved, what each one is for, and which of them you can push back on. Figures are typical ranges for Ontario, not quotes, and your file may differ.
Ask us for the all-in cost on your file before you commit to anything. It is a reasonable question and you should expect a straight number.
The one-time costs
What comes off the top
These are paid once, at the start. Most lenders deduct them from the advance rather than asking you for a cheque, which means you feel them as a smaller deposit rather than a bill. Worth knowing so the number that lands in your account does not come as a shock.
Property appraisal
An independent appraiser inspects the home and reports its market value, which sets the amount the lender will advance. Usually a few hundred dollars for a standard urban home, more for rural properties, acreage or anything unusual that takes longer to assess.
Sometimes covered. Lenders periodically run promotions that absorb the appraisal, and we will tell you when one is live rather than letting you pay it unnecessarily.
Independent legal advice, your own lawyer
You are required to have a lawyer who acts for nobody but you go through the contract with you before completion. Typically several hundred to around a thousand dollars depending on the firm.
This is not a fee worth minimising. It is the protection built into the product for exactly your benefit, and the one cost here we would never encourage you to shop down to the cheapest option.
The lender's legal and closing costs
Registering the charge, title work, title insurance and the lender's own legal file. Commonly in the region of one to two thousand dollars, deducted from the advance. Some lenders fold this into a single set-up or administration fee instead of itemising it.
Set-up or administration fee
A lender charge for arranging the loan. It varies a good deal between lenders and between products, and it is one of the more visible differences when we place two offers side by side. Occasionally reduced on promotion or on larger advances.
Discharging an existing mortgage, if there is one
If a mortgage or line of credit is secured against the home it has to be cleared as part of the transaction. That may attract a discharge fee and, if you are mid-term, a prepayment penalty from your existing lender. This catches people out, and it is worth establishing early, because on some files it changes whether the deal makes sense at all.
The ongoing costs
What you carry for as long as the loan runs
You make no monthly payment on the loan itself. You still have obligations, and failing them is one of the few ways a reverse mortgage can be called in early.
Interest, accruing
Not a bill, but the largest cost by far over a long hold. It compounds onto the balance instead of being paid. How the rate is set and how compounding works.
Property taxes
Yours to keep current, as they always were. A lender may ask for proof from time to time. Falling badly behind is a default under the contract.
Home insurance
Must stay in force, with coverage adequate to the property. The lender will normally want to be shown on the policy. Again, lapsing is a default, not a technicality.
Keeping the home in repair
You agree to maintain the property in reasonable condition, since it is the lender's only security. Nobody inspects your paintwork. Serious deterioration is a different matter.
Condominium fees, if applicable
Common expenses continue and must be kept current. Arrears create a lien that ranks ahead of the mortgage, so lenders take this seriously on condominium files.
Annual statement, no charge
You receive a statement showing the balance and the interest added. Read it. It is the simplest way to keep track of what the loan is costing you.
Want the all-in number for your situation? Give us the ages, the property and the community and we will tell you the likely advance, the costs coming off it, and what actually lands in your account.
Call 1-416-878-9448The cost at the end
What it costs to get out
Prepayment penalty, if you exit mid-term
Usually the largest single cost after the interest itself, and usually heaviest in the early years. Frequently reduced or waived when the loan ends on death, and sometimes on a permanent move into long-term care, though the conditions differ by lender. The detail is on the rates page, because it belongs next to the rate rather than buried here.
Discharge fee
A modest administrative charge to remove the lender's charge from title when the loan is repaid. Small relative to everything else, and standard across mortgage lending generally.
Legal costs on the way out
Whoever handles the sale or the estate will have conveyancing work to do. Ordinary real estate legal cost, not something the reverse mortgage creates, but it belongs in an honest accounting.
And what it does not cost
The estate does not owe more than the house sells for. Canadian reverse mortgages generally guarantee this, provided the terms have been met, so the debt cannot be passed to your children. We show you that clause in the contract rather than asking you to take our word for it.
Our side of it
What we charge you
Nothing. We are compensated by the lender when a file funds, which is standard for mortgage brokering in Ontario and which we would rather you heard from us than worked out for yourself.
You pay us no fee
No application fee, no broker fee, no charge for the comparison or the conversation. If that ever changed on a particular file, it would be disclosed to you in writing before you signed anything, as the rules require.
And here is the incentive that creates
We are paid when a deal closes, so we have a reason to want one to close. You should know that when weighing our advice. It is also why we publish a page about when this product is the wrong answer and why we tell people to take a line of credit instead when they can get one. Judge us on whether we actually do that.
Further independent reading: the Financial Consumer Agency of Canada on reverse mortgage costs.
Who you are dealing with
The people who train the industry on this product
Joe White, principal
Reverse Mortgages of Canada is the reverse mortgage practice of 360 Lending Solutions, led by Joe White.
Joe has spent nearly thirty years in the Canadian mortgage industry. He founded REMIC, the Real Estate and Mortgage Institute of Canada, the country's largest mortgage and insurance education company, and he wrote the Ontario mortgage agent licensing textbook now in its sixteenth edition. If you deal with a licensed mortgage agent in Ontario, there is a good chance they studied from a book he wrote. He was inducted into the Canadian Mortgage Hall of Fame in 2019.
That matters here for one practical reason. Most people arranging reverse mortgages sell one product. We teach the whole subject, including the parts that do not flatter it, which is why you will get a recommendation against this product when it is not the right fit.
At a glance
How much could you unlock from your home?
A quick estimate of the tax-free cash a reverse mortgage could release, based on the four things that move the number most. It gives you a range, not a promise — the exact figure comes from an appraisal and a conversation.
About the home and the homeowners
Four questions. Nothing here identifies you.
If two people own the home, enter the younger age. Lenders price against whoever is expected to live there longest, so a couple usually qualifies for less than the older partner would alone. It is the most commonly misunderstood part of this product.
Your own estimate is fine at this stage.
Location changes this more than most people expect — the same home can be worth tens of thousands more or less depending only on the community.
$0–$0
What moved your estimate
Get the real number
A licensed agent at 360 Lending Solutions will run your actual address, ages and property details and send you the exact figure.
This is an estimate, not an offer of credit. The figures shown are indicative only, produced from a simplified model, and are not a quote, a pre-approval, or a commitment to lend. Actual amounts depend on a full application, a property appraisal, and the lender's criteria and rates on the day. Amounts are rounded.
Reverse mortgages are available to homeowners aged 55 and over. Interest accrues on the outstanding balance and reduces the equity remaining in the home. Independent legal advice is required before completion.
Ask us what it costs before you ask us for money
We will walk through every cost on your file, tell you which ones are negotiable and which are not, and give you the figure that actually reaches your account.