Are you a Canadian homeowner over 55 who wants to access some of your home equity in retirement? A reverse mortgage from Equitable Bank may be a suitable option.
As one of the top lenders offering reverse mortgages in Canada, Equitable Bank provides several competitive products. This extensive review covers everything you need to know about getting an Equitable Bank reverse mortgage in 2024.
We’ll compare Equitable’s offerings to competitors, discuss key features and considerations, and provide tips to find the best reverse mortgage for your needs.
Equitable Bank as a Reverse Mortgage Lender
Founded in 1970, Equitable Bank is Canada’s seventh-largest bank, with over $100 billion in assets. The bank offers nationwide residential lending, savings products, and commercial financing services.
Equitable Bank is one of Canada’s only two federally regulated banks offering reverse mortgages. It first entered the market in 2018 with the launch of its Path Home Plan product, which later evolved into the Flex Reverse Mortgage solutions offered today.
As a relatively new player in reverse mortgages, Equitable Bank has quickly grown its market share. The bank touts its flexible features and pricing, which aim to deliver value and choice to Canadian homeowners.
Equitable Bank promotes its reverse mortgage products as a source of tax-free funds to take out home equity without selling your property or making ongoing payments.
Some key advantages highlighted by Equitable Bank include:
- Access to a portion of your home’s value
- No requirement for regular payments
- Maintain ownership and stay in your home
- Funds can be used for any purpose
- Available for terms up to 5 years
- No minimum income requirements
Let’s look deeper at the specific reverse mortgage products Equitable Bank offers for Canadians.
What are Equitable Bank Reverse Mortgage Products?
Equitable Bank offers three main products for Canadian homeowners to consider:
- Flex Reverse Mortgage
- Flex Plus Reverse Mortgage
- Flex Lite Reverse Mortgage
While the products share similarities, some key differences between these reverse mortgages impact borrowing limits, eligibility, and costs.
Equitable Bank Flex Reverse Mortgage
The Flex Reverse Mortgage is Equitable Bank’s standard product available to homeowners 55 and older across Canada.
With the Flex Reverse Mortgage, you can borrow between 15% and 55% of your home value, up to a maximum of $800,000, based on the appraised property value and age. The minimum initial advance is $25,000.
This product requires a minimum home value of $250,000 and provides a no negative equity guarantee. This ensures the loan will stay within your home’s fair market value.
You have flexibility in how you receive the funds from a Flex Reverse Mortgage:
- Initial lump-sum advance
- Scheduled advances over time
- Ad hoc advances anytime as needed
The Flex option offers mortgage terms from 6 months to 5 years, during which the interest rate remains fixed. You can then renew for a new fixed term.
Flex Reverse Mortgage Terms and Rates:
| Term | Rate |
|---|---|
| 6-Month Fixed | 7.89% |
| 1-Year Fixed | 7.99% |
| 2-Year Fixed | 7.49% |
| 3-Year Fixed | 6.89% |
| 5-Year Fixed | 6.49% |
| 5-Year Variable | 9.35% (Prime Rate + 2.65%) |
The setup fee is $995 and can be deducted from the mortgage advance. There are no monthly payments required.
When your reverse mortgage term expires, you can simply renew it for a new term at the current rates.
The Flex Reverse Mortgage provides flexibility to access your home equity through different advanced options. It suits most homeowners who meet the basic age and property value requirements.
Equitable Bank Flex Plus Reverse Mortgage
The Flex Plus product from Equitable Bank targets borrowers aged 70 and up who want to access a higher percentage of their home’s value through a reverse mortgage.
With the Flex Plus Reverse Mortgage, you can borrow between 44% and 59% of your home’s appraised value. This increased borrowing power makes it a good choice if you want to maximize the funds from your reverse mortgage.
Aside from the higher minimum age and loan amounts, the features mirror the standard Flex Reverse Mortgage:
- No regular payments
- Maintain ownership of your home
- Minimum property value of $250,000
- No negative equity guarantee
- Option for lump-sum or scheduled advances
- Terms from 6 months to 5 years
Flex Plus Reverse Mortgage Terms and Rates
| Term | Rate |
|---|---|
| 6-Month Fixed | 8.24% |
| 1-Year Fixed | 8.54% |
| 2-Year Fixed | 8.44% |
| 3-Year Fixed | 8.14% |
| 5-Year Fixed | 7.74% |
| 5-Year Variable | 10.19% (Prime Rate + 3.49%) |
The Flex Plus product provides higher loan amounts than the standard Flex Reverse Mortgage, with maximum borrowing up to 59% of home value. This can be useful to access more equity or have a lower home value.
Equitable Bank Flex Lite Reverse Mortgage
The Flex Lite Reverse Mortgage product is Equitable Bank’s most conservative option. It offers lower loan amounts in exchange for potentially better rates.
This product is for borrowers aged 55 and up. You can access between 15% and 40% of your home’s value, up to a maximum of $800,000.
The minimum property value requirement remains $250,000. Like all Equitable Bank reverse mortgages, the Flex Lite has no negative equity guarantee.
The key difference with the Flex Lite product is that it only offers a one-time lump-sum payment option. It is not possible to take scheduled advances over time.
However, the Flex Lite Reverse Mortgage often has lower interest rates than Equitable’s other products.
Flex Lite Reverse Mortgage Terms and Rates
| Term | Rate |
|---|---|
| 6-Month Fixed | 7.94% |
| 1-Year Fixed | 8.09% |
| 2-Year Fixed | 7.74% |
| 3-Year Fixed | 7.19% |
| 5-Year Fixed | 6.59% |
| 5-Year Variable | 9.35% (Prime Rate + 2.65%) |
The Flex Lite Reverse Mortgage provides a more conservative borrowing limit at generally lower rates. It can be a prudent choice for homeowners who need only a smaller portion of their home equity. [Source ]
What are the Pros and Cons of an Equitable Bank Reverse Mortgage?
Equitable Bank Reverse Mortgage has distinguished benefits and drawbacks to consider
Pros:
- Access tax-free cash from your home equity
- No required monthly mortgage payments
- Maintain ownership of your home
- Funds can be used for any purpose
- Available across Canada with competitive rates
- Online account management and document access
Cons:
- Reduces the amount of home equity over time
- Prepayment penalties if repaid early
- Higher overall interest costs than traditional mortgages
- Upfront fees and setup costs
- May impact the inheritance amount left to heirs
- Not available for homes under $250,000
How does Equitable Bank compare to Other Reverse Mortgage Lenders?
Equitable Bank’s main competitor for reverse mortgages is HomeEquity Bank, provider of the CHIP Reverse Mortgage. So, how do Equitable Bank’s offerings compare?
Rates
Equitable Bank consistently offers lower interest rates than HomeEquity Bank across all terms. For example, HomeEquity Bank’s current 5-year fixed rate is 0.4% higher than Equitable’s 5-year fixed rate.
Setup Fees
Equitable Bank has a lower $995 setup fee than HomeEquity’s $1,795 to $2,995 range.
Advance Flexibility
Equitable Bank requires homeowners to deposit more funds upfront for the lowest rates. HomeEquity provides more flexibility for smaller initial advances.
Prepayment Policy
Equitable Bank’s prepayment penalty structure is more favourable if you want to pay off your reverse mortgage in the first 3 years.
Technology
Equitable Bank offers an online portal for accessing your account. HomeEquity Bank requires phoning in for account access and changes.
Equitable Bank reverse mortgages have a pricing advantage regarding interest rates, fees, and penalties in many situations.
However, there are some key areas where HomeEquity Bank may be preferable:
Lending Territory
HomeEquity Bank is available nationwide, including in rural locations. Equitable Bank currently has limited availability outside of major urban centers.
Maximum Loan Amounts
HomeEquity Bank provides higher limits for some scenarios, such as homes worth over $800,000. They also allow bundled second mortgages up to 65% of total lending.
Short-Term Options
HomeEquity Bank offers a 6-month open reverse mortgage that provides more flexibility for short-term borrowing needs.
While Equitable Bank wins on pricing, HomeEquity Bank still offers useful features in certain situations. However, Equitable Bank has continued to improve its competitiveness since entering the reverse mortgage market in 2018.
Key Reverse Mortgage Considerations
While a reverse mortgage from Equitable Bank can provide many benefits, weighing all factors carefully before proceeding is important. Here are the 4 key considerations:
How Funds Can Be Used
The funds from a reverse mortgage can generally be used with no restrictions. Some popular uses include:
- Supplementing retirement income
- Making home renovations
- Covering healthcare costs
- Helping family members with expenses
- Travel or other leisure activities
Freedom to use the funds as needed is a major perk of a reverse mortgage.
Impact on Estate and Inheritance
Since heirs will eventually repay the reverse mortgage balance, it can reduce the amount of inheritance from your home’s equity. Careful planning about how funds are spent can help minimize negative impacts.
Discussing your reverse mortgage with heirs ahead of time is wise to avoid surprises or misunderstandings later on. Options like insurance can also protect some equity for heirs.
What Happens if the Loan Exceeds Property Value?
This concern is common, but Equitable Bank’s reverse mortgages include an equity protection guarantee. This ensures the borrower will never owe more than the home’s fair market value.
Even if property prices drop or the loan balance grows over time, the lender assumes the risk of any shortfall in equity. Heirs would not be responsible for repaying more than what the home sells for.
Alternatives to Equitable Bank Reverse Mortgage
Besides a reverse mortgage, other options for accessing home equity include:
- Traditional home equity line of credit
- Downsizing to a smaller property
- Renting out part of your home
- Taking in a boarder
These may provide smaller funds but avoid reducing your home’s equity. Make sure to explore all possible alternatives before settling on a reverse mortgage.
For some retirees needing larger sums, the reverse mortgage may prove the optimal solution when all factors are weighed. But it’s beneficial to consider it alongside other options.
Is Equitable Bank the Right Choice for You?
Based on the information we’ve covered, here are the 9 main reasons why Equitable Bank may be the best reverse mortgage lender for your specific needs:
You Want the Lowest Rates and Fees
Equitable Bank consistently offers the most competitive pricing on their reverse mortgage products. Lower rates and costs mean more value for your borrowing needs.
You Need Flexibility in How Funds Are Advanced
Equitable Bank allows you to take your funds as lump-sum, scheduled advances, or ad hoc payments to better suit your spending needs. Their competitors may require you to take more money upfront.
You Won’t Repay Early in the First 3 Years
Equitable Bank’s prepayment penalty structure is very favourable after 3 years. If you know you won’t be repaying your reverse mortgage within the first 3 years, Equitable provides the lowest penalties.
You Prefer Digital Account Management
Equitable Bank offers digital access to monitor your reverse mortgage through its online portal, a convenient option not available from all competitors.
You’re Located in a Major Urban Area
Equitable Bank has focused its lending primarily in metropolitan areas so far. They likely offer competitive reverse mortgage options if you’re in a major city.
Of course, Equitable Bank may only sometimes provide the best reverse mortgage solution, depending on your specific circumstances. Here are some cases when another lender may be preferable:
You Have a Home Value Above $800,000
Equitable Bank caps reverse mortgages at $800,000. A lender like HomeEquity Bank can provide higher loan amounts with a higher-valued property.
You Need a Short-Term Option
If you need reverse mortgage funds for less than six months, HomeEquity Bank’s open six-month term offers more flexibility.
You’re in a Rural Location
HomeEquity Bank will lend to most rural regions across Canada. Equitable Bank currently has limited availability outside major urban centers.
You Require Multiple Advanced Options
While improving, Equitable Bank still has fewer advance options than a competitor like HomeEquity Bank in some situations.
As with any big financial decision, get personalized quotes from multiple lenders before choosing the best reverse mortgage provider for your specific needs.
Applying for an Equitable Reverse Mortgage
If you’ve weighed your options and decided an Equitable Bank reverse mortgage aligns with your needs, here is what to expect during the application process:
Eligibility Requirements
To qualify for an Equitable reverse mortgage, you must meet the following criteria:
- Be 55 years or older (or 70+ for Flex Plus products)
- Own a home valued at $250,000+
- Occupy the home as your primary residence
- Have sufficient equity built up
- Maintain the home in good condition
- Have property taxes paid and insurance coverage
You can get an initial estimate of your eligibility and potential loan amount using an online reverse mortgage calculator.
Getting Personalized Quotes
The amount and terms you qualify for depend on personal factors like age, home value, location, and equity amount.
Work with an expert reverse mortgage advisor to get quotes tailored to your situation. They can also help you through the application and approval steps.
Following these tips will help ensure a smooth journey getting your Equitable Bank reverse mortgage.
Learn more about Canada’s Best Reverse Mortgage Choices:
Tips for Finding the Best Reverse Mortgage
As a major financial decision in retirement, it pays to take your time and carefully consider all aspects when choosing a reverse mortgage lender.
Here are the six top tips to follow:
- Consult with a financial advisor – An independent advisor can review your overall retirement financial plan and whether a reverse mortgage aligns with your long-term goals.
- Consider shorter terms – Shorter 1-year terms give you more flexibility if your needs change rather than locking in for longer 5-year terms.
- Think about both short and long-term implications – Understand how a reverse mortgage impacts your current cash flow along with the eventual equity you’ll leave behind.
- Get quotes from multiple lenders – Compare all the pricing scenarios and options from lenders like Equitable Bank and HomeEquity Bank.
- Look for hidden conditions or clauses – Watch for any fine print around equity protection guarantees, prepayment penalties, or advance options from lenders.
- Involve family members or heirs early – Discuss your plans with loved ones who stand to inherit your home to avoid misunderstandings.
Researching reverse mortgages and speaking to qualified advisors will help you confidently choose the best product for your unique needs and situation.
Get Expert Advice for Your Reverse Mortgage
Equitable Bank has become Canada’s top reverse mortgage lender, providing competitive options for homeowners over 55. Their products deserve strong consideration thanks to reasonable pricing and valuable features.
However, ensure you understand all the implications and get personalized quotes before proceeding. Consulting qualified advisors ensures you choose the best reverse mortgage product for your unique financial situation.
Contact an advisor at Best Mortgage Online today to learn more and get assistance on Equitable Bank reverse mortgages and other retirement lending options.
FAQs
What are the eligibility requirements for an Equitable Bank reverse mortgage?
To qualify, you must be 55 or older, own a home worth $250,000+ as your primary residence with equity built up, maintain the home, have property taxes paid, and have insurance coverage.
How much money can I get from an Equitable reverse mortgage?
You can access 15% to 59% of your home value depending on your age, home value, location, and equity amount. Receive a free customized quote to estimate your amount.
Does Equitable Bank offer reverse mortgages outside of major cities?
Currently, Equitable Bank focuses on urban locations but has been expanding to more rural areas over time. Check if your location is eligible.
How do I receive the funds from my Equitable reverse mortgage?
Depending on your needs, you can receive your funds as an initial lump sum, scheduled advances, or ad hoc payments. This flexibility is a key benefit of Equitable.
What inheritance is left after taking an Equitable reverse mortgage?
It depends on how much you borrow and equity growth over time. Discuss your plans with heirs to help project inheritance impacts and manage expectations.
What are the fees for setting up an Equitable reverse mortgage?
Equitable Bank charges a $995 setup fee. You also pay appraisal, legal, and closing costs. The setup fee can be deducted from your mortgage proceeds.
Does Equitable Bank offer insurance on reverse mortgages?
Yes, Equitable partners with insurance providers like CHIP Reverse Mortgage Insurance to offer products that can protect your equity and inheritance.
What happens if I outlive the term of my reverse mortgage?
At the end of your 1-5 year term, you simply renew into a new term at that time's prevailing interest rates. There is no requirement to repay the balance.
Can I get an Equitable reverse mortgage if I still have a mortgage?
Yes, but any existing mortgages or secured loans need to be paid out before or as part of setting up your reverse mortgage.