Do Condos Qualify for Reverse Mortgages in Canada?

Table of Contents

Reverse mortgages are an excellent financial solution for retirees and seniors looking to access the equity in their homes without selling their property. However, there’s one question that often arises: Can you get a reverse mortgage on a condo?

If you own a condo and are considering a reverse mortgage, it’s important to understand the eligibility requirements and limitations. In this article, we’ll explore the ins and outs of condos in Canada, including the eligibility criteria, benefits, and how to qualify.

Condos and Reverse Mortgages: Eligibility Criteria

While reverse mortgages are available to homeowners over the age of 55, not all properties are eligible. Condos, in particular, have some specific requirements that need to be met in order to qualify for a reverse mortgage:

Type of Ownership

One of the key factors in determining your condo’s eligibility is the type of ownership. Condos can be either freehold or leasehold. Freehold condos, which are owned outright by the homeowner, are generally easier to qualify for a reverse mortgage.

On the other hand, leasehold condos are owned by the building’s management or third-party landlord, which may further restrict eligibility for reverse mortgages. This is often up to your lender’s discretion.

If your condo is a leasehold property, dig out your Head Lease and (if applicable) the Sub Lease, as these are the two documents you’ll need to have ready for review to determine eligibility.

Co-ops are another type of ownership that may or may not be eligible for a reverse mortgage.

Primary Residence

Reverse mortgages are only available on primary residences, which means that second homes or investment properties are generally not eligible. If you own a condo as a vacation home or rental property, it may not be able to qualify for a reverse mortgage. However, these second homes or vacation properties can be part of an inter alia (blanket) reverse mortgage over several properties, as long as the primary residence is included.

Other Factors

It’s important to keep in mind that the eligibility requirements for a reverse mortgage on a condo can vary depending on the lender. Other factors influencing the approval decision include the property’s location and the condominium’s regulations. Before applying for a reverse mortgage, speak to a lender or broker who specializes in these types of loans, as they can understand the specific criteria that will be used to evaluate your property.

Additionally, it’s essential to remember that a reverse mortgage can impact your estate planning and the inheritance you leave to your heirs, so you should carefully consider all the factors involved before making a decision.

Benefits of Reverse Mortgages for Condo Owners

The benefits of reverse mortgages on condos are the same as other types of properties:

Access to equity: The main benefit of a reverse mortgage, whether it’s a house or condo, is that it allows you to access the equity in your property without selling your home or taking on additional debt. This can be particularly appealing if you’re a retiree looking to supplement your retirement income, pay for unexpected expenses, or make specific renovations or repairs.
No monthly mortgage payments: Reverse mortgages do not require monthly mortgage payments, as the interest accrues over time and is added to the loan’s outstanding balance. This can benefit condo owners on a fixed income who cannot afford an additional monthly bill.
Flexibility: Reverse mortgagees provide flexibility in terms of how the funds can be used. Condo owners can use the money for any purpose they choose, whether to pay for home renovations, travel, or medical expenses.

How to Qualify for a Reverse Mortgage on a Condo

Generally, the process of qualifying for a reverse mortgage on a condo is the same as all other types of properties. The only difference is that specific eligibility requirements, which we outlined above, may come into play. It’s best to speak with a professional reverse mortgage broker, like the Seniors’ Lending Centre team. We have the knowledge and expertise to help you determine if a reverse mortgage on your condo is possible for your specific property. Contact us today to learn more.