Equitable Reverse Mortgages Mortgage Review: Rates, Lending Guidelines and Who They Suit

Equitable Reverse Mortgages Mortgage Review: Programs & Lending Guidelines

How Equitable Reverse Mortgages's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

Equitable Reverse Mortgages' Mortgage Offering — Residential

Reverse mortgages only, for homeowners aged 55 and over. No conventional mortgage, no purchase financing, no rentals, no line of credit and no bridge financing.

A reverse mortgage releases equity without requiring a monthly payment. Interest accrues onto the balance and the loan is settled when the home is sold or the last borrower leaves it. Payments are permitted but never required.

Three products — Flex, Flex PLUS and Flex Lite — differing in how much can be advanced and how the pricing works, all sharing the same setup cost.

Three ways to take the money, which is where this offering separates itself:

• An initial lump sum at funding.
• Single advances afterwards, from $5,000, on either a fixed or adjustable rate.
• Recurring scheduled advances — monthly, quarterly, semi-annually or annually — set up for as long as twenty years. Adjustable rate only, with modest minimums per instalment.

That last option turns home equity into something closer to a pension than a loan, and interest accrues only on what has actually been drawn.

Switching from another reverse mortgage lender is supported, with cashback toward the costs and, on some files, a waived setup fee. That matters in a small market where a borrower who took a reverse mortgage years ago has had no realistic way to move it.

Equitable Reverse Mortgages Income and Qualification Requirements

There are no debt service ratios and no qualifying rate. No payment is required, so nothing is being serviced. What qualifies the file is age, property and equity.

The requirements: the youngest borrower is at least 55, the home is the principal residence, and it sits in an eligible city or large town in Ontario, Alberta, British Columbia or Quebec. Minimum advance is $25,000.

Income is reviewed lightly, to confirm the household can carry the property rather than to service a loan. Pension income — including the public retirement and income-supplement programs — is accepted, either with a reasonably strong credit score or on a stated basis. Employment income of all kinds counts: salaried, hourly, contract, part-time, bonus and casual. Self-employed, commission, investment and disability income are all accepted. Seasonal income is looked at individually, and on many files income is not required for approval at all. Provincial disability support for severe handicap is not used.

No down payment, no gifted funds, and no down payment documentation, since nothing is being purchased.

Property taxes stay with the borrower, who can pay them directly or, in British Columbia, apply to the provincial deferment program once the reverse mortgage has funded — a combination worth knowing about, because it removes the largest remaining cash outlay for an older homeowner.

Independent legal advice is required, and is a cost of the transaction alongside the valuation and closing costs.

Power of attorney is accepted where the attorney genuinely holds authority over real property — not where it is being used simply because the owner is out of the country.

Equitable Reverse Mortgages' Specialty Programs

Recurring advances. The scheduled-income structure is the distinguishing feature. A borrower can arrange advances at a set frequency for up to twenty years, drawn on an adjustable rate, and the balance grows only as money is actually taken. For someone whose problem is monthly cash flow rather than a one-time expense, this costs materially less over time than a lump sum sitting in a savings account.

Ad-hoc advances. Additional draws on request between scheduled ones, at a small transaction cost.

Flex, Flex PLUS and Flex Lite. Three tiers, chosen against how much equity is being released and what the borrower wants to pay for it. The setup cost is the same across all three.

The reverse mortgage switch program. For a borrower already holding a reverse mortgage elsewhere: cashback of 1% of the balance up to a ceiling, a rate committed to beat posted competitors, and a waived setup fee where the existing registration is a collateral charge. The minimum loan is $150,000, and the cashback is repayable if the mortgage is paid out within five years. Reverse mortgages are notoriously sticky, and a defined switch route is unusual.

Portability. The mortgage can move with the borrower to a new principal residence rather than being paid out on a sale.

Spousal buyout. A reverse mortgage can fund one, reviewed individually.

There is no net worth program, no self-employed program and no new-to-Canada program — none of which apply where nothing is being debt-serviced.

Minimum Credit Scores & Treatment of Liabilities

No minimum credit score. Credit is reviewed, but there is no floor, because there is no payment obligation to default on. A stronger score can simplify how pension income is documented.

Liabilities are cleared rather than serviced. Anything registered ahead of the reverse mortgage is paid out of the advance, since this product takes first position. Other debts are commonly paid from the proceeds as well, and that is frequently the reason for the transaction — the borrower replaces several monthly payments with none. Nothing is then carried in a ratio, because there is no ratio.

Property taxes remain the borrower's, payable directly or deferred under a provincial program where one is available.

No guarantors and no co-signers. Everyone with an interest in the home is a borrower. On a couple's home both spouses are on the mortgage, which is what secures the survivor's right to remain.

Both credit bureaus are used.

Terms & Amortization Options

There is no amortization. Nothing is repaid on a schedule.

Terms. Fixed terms of six months, one, two, three and five years, and a five-year variable. A borrower taking scheduled recurring advances uses the adjustable rate, which also allows a switch to fixed later. On the adjustable rate, interest accumulation increases the month after prime rises rather than immediately.

No required payments at any frequency. Voluntary payments are permitted and straightforward to make.

Prepayment charges decline over time and eventually disappear: five months' interest in the first year, four in the second, three in the third, three months' interest from years four through ten, and no charge at all from the eleventh year onward. From the sixth year, the entire balance can be repaid with no charge on three months' written notice — a considerably shorter runway to a free exit than a reverse mortgage usually offers.

Registration is a collateral charge, which allows further advances without a new registration — necessary for a product designed to be drawn down over years.

No renewal in the usual sense. There is no maturity to renegotiate at and no renewal rate to fear, though the term chosen does determine when the rate resets.

No pre-approvals or rate holds.

Special Notes

• Scheduled advances are the reason to look here. Interest accrues only on what has been drawn, so a borrower who needs $2,000 a month pays far less over ten years than one who takes the full amount at the start. Most reverse mortgage comparisons ignore this and compare rates alone.
• The prepayment charge ends earlier than usual. Free payout from the sixth year on notice, and no charge whatsoever from the eleventh.
• A real switch program from another reverse lender. Cashback, a rate commitment and, on collateral-charge files, a waived setup fee. The cashback is repayable inside five years.
• British Columbia borrowers can stack the provincial property tax deferment on top of the reverse mortgage once it has funded, removing the last significant recurring cost.
• One setup fee across all three products, plus valuation, independent legal advice and closing costs.
• Independent legal advice is mandatory — the point at which a lawyer with no stake in the deal explains what is being signed.
• Power of attorney is workable, which is not always the case and matters for families managing an aging parent's affairs.
• Very small condominiums are financed, down to 325 square feet, with detached homes from 575.
• No bridge financing and no rentals. The property must be the principal residence.
• Eligible property types are detached homes, condominiums, townhouses and duplexes. Bare land condominiums are accepted. Rural, agricultural and hobby farm properties are reviewed individually.

Service Area

Ontario, Alberta, British Columbia and Quebec — more than 350 cities and large towns, concentrated in large and medium urban and suburban markets.

Not available in Atlantic Canada, the Prairies outside Alberta, or the territories.

The footprint is by city rather than by province, so a property in a small or remote community may fall outside it even in a province that is otherwise served. Rural and agricultural properties are assessed individually.

Loan-to-Value Treatment

Age is the primary driver. The older the youngest borrower, the more can be advanced, because the projection period is shorter:

The three products sit at different points inside that range, so the same borrower on the same property will be quoted different maximums depending on which is used.

Property and location adjust it from there. In the Greater Vancouver area a sliding scale applies to the underlying value — the full ratio on the first $2 million, stepping down between $2 million and $2.5 million, and lower again above that — so an expensive property does not release proportionally more equity.

There is no income-based tiering, no purchase-versus-refinance distinction and no credit-score tiering on loan-to-value, because none of those inputs drive the risk on this product. Minimum advance is $25,000, and minimum sizes are 575 square feet for a detached home and 325 for a condominium.

On scheduled advances, the approved amount is the ceiling and the balance climbs toward it as money is drawn — so the loan-to-value at funding is often far below the maximum, and rises over the life of the mortgage.