Principal and Interest

You will probably have a lot of questions regarding how the outstanding balance is calculated throughout the life of your PATH Home Plan equity release (commonly known as a reverse mortgage). The outstanding balance is made up of the principal (the amount you have borrowed), costs and fees, and interest (the percentage we charge for lending the money). You can choose to make prepayments toward your principal and interest at specific times, otherwise payments are only required when the mortgage is due.

When is the mortgage due?

Since the PATH Home Plan is meant for long-term lending with no quantified term, the due date of the mortgage is established on the occurrence of any of these events:

  • Sale or transfer of the property
  • Default
  • When the last borrower moves into a long-term care or retirement residence
  • When the last borrower passes away

What is owed on the mortgage due date?

  • Principal and accrued interest
  • Default expenses, if any
  • Fees and costs
  • Prepayment charge, if any

Payment Guarantee

Is there a chance I could pay more than fair market value?

We guarantee that as long as you have met your mortgage obligations, the amount you owe on the due date will not be more than the fair market value.

What is the fair market value based on?

Fair market value is the amount that would be paid on the open market, on the applicable date, to buy the property assuming there are no legal claims against the property.

Prepayments

Although no regular payments are required until the mortgage becomes due, you have the benefit of prepayment privileges. This allows you to prepay your principal or interest without being subject to a prepayment charge (which can be calculated here). Of course, certain conditions would need to be met.

When can I make a prepayment without charge?1

Interest Payment

Interest Payment

Prepay any of your interest outstanding once per calendar month.

Principal Payment

10%

Prepay up to 10% of your principal once per 12-month period (starting from your initial advance).

After 5 Years

5

Prepay in excess of 10% of your principal or the entire outstanding balance within 30 days of an interest rate reset date.

After 10 Years

10

Prepay in excess of 10% of your principal or the entire outstanding balance at any time.

1Subject to certain conditions.

Note:
  • Any payments received will be applied first to fees and charges, then to interest before being applied to principal.
  • If you exceed your prepayment privilege, you will be subject to a prepayment charge and applicable fees.