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: