What are Reverse Mortgage Penalties?

Reverse mortgage lenders levy prepayment charges (a penalty) if you pay back your reverse mortgage too early.

Here’s a quick overview of prepayment penalties that apply at Canada’s two biggest reverse mortgage providers:

 

Prepayment Year Equitable Bank HomeEquity Bank
Year 1

5 months’ interest

5% of balance
Year 2

4 months’ interest

4% of balance
Year 3

3 months’ interest

3% of balance
Years 4-10

3 months’ interest

3 months’ interest
Year 11

No charge

3 months’ interest

 

Other notes: