For many older Canadians, their home is their largest asset, so tapping into their home’s equity for cash can be an effective financial strategy.
With any financial decision, it’s important to know the costs and fees involved. For products that borrow from your home equity, these can include appraisal and lawyer fees. To make an informed choice, be sure to include all costs. This way, you’ll have a clear understanding of your total cost of borrowing.
What are reverse mortgage closing costs?
In addition to the interest you’ll pay for the loan amount, a reverse mortgage comes with various closing fees designed to cover the cost of the services required throughout the process, much like a conventional mortgage.
In Canada, most reverse mortgage lenders will charge the following:
- Set-up fee
- Home appraisal fee
- Closing costs
As these costs and fees vary across lenders, as well as whether they’re required up front or deducted from your reverse mortgage proceeds, it’s important to ask your lender how these may apply to you. Start your exploration with Equitable Bank to see how a reverse mortgage could work for you.
Set-up fee
Just like when you take out a traditional mortgage, there are services and processes that you’ll need to pay for when setting up your reverse mortgage.
When entering into a reverse mortgage, you’ll typically be charged a one-time processing, administrative, or set-up fee, which varies among lenders. At Equitable Bank, the fee is $995 and will come out of your reverse mortgage proceeds.
Appraisal fee
Establishing your home’s value is an important part of the reverse mortgage application process, as the appraisal plays a large part in determining how much you can borrow.
To establish the value of your home, reverse mortgage lenders require an appraisal performed either by a licensed independent appraiser or via virtual technology, depending on which you qualify for.
Some lenders will charge you up front for the appraisal, while others will deduct the fee from your reverse mortgage funds.
Depending on where you are in Canada, as well as which lender you choose, appraisal costs will vary. At Equitable Bank, your appraisal fee can run approximately $300 - $600, and is normally charged upfront. However, if you qualify for it, our fastest, most cost-effective appraisal option can be done virtually, with the charge coming out of your reverse mortgage proceeds.
Independent Legal Advice (ILA)
As a protection for Canadian consumers, reverse mortgage customers are generally required to receive Independent Legal Advice (ILA) before officially entering into the loan.
ILA is advice provided by a third-party lawyer—in other words, not affiliated with your lender—to ensure you fully understand the details of your reverse mortgage agreement, including all possible consequences and legal or financial responsibilities, as well as to ensure you are of sound mind and judgment, and are not being pressured to sign any mortgage documents.
You will be responsible for paying this fee up front and can expect to pay $500 - $700 for this service; however, the cost does vary depending on the lawyer selected.
To learn more, read our explainer on the ILA process with Equitable Bank.
Title insurance
Title insurance is typically required by lenders, and is designed to protect homeowners and their lenders against losses related to the property’s title or ownership, such as existing liens and fraud. This is a one-time charge based on the value of your property. At Equitable Bank, this can average from $500 - $650, and is deducted from your reverse mortgage proceeds.
Equitable Bank Reverse Mortgage costs
The following are what costs typically look like at Equitable Bank. To close your reverse mortgage, you have three different options to choose from—so you can select which best fits your unique situation.
Option 1: First Canadian Title Platinum (FCT) + ILA
Our most budget-friendly option, this option involves only one lawyer to provide ILA, plus our closing service provider, FCT, to complete the closing of the mortgage.
The costs and fees involved are:
| Equitable Bank set-up fee | ~$995 |
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| Appraisal fee | ~$300 - $600 (Estimates are based on appraised home value averages) |
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| ILA | ~$700 (Cost may vary depending on lawyer selected) |
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TOTAL Excludes title insurance, which is estimated at approximately $650 (based on Equitable Bank averages). Title insurance varies based on property value. | ~$1,995 - $2,295 |
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Option 2: Deeded lawyer + ILA*
If you’d prefer a faster, more streamlined closing experience that can be tracked online from the comfort of home, this option involves one lawyer to provide ILA, plus a Deeded lawyer who will facilitate the closing of the mortgage virtually. The Deeded fee will be paid from your reverse mortgage proceeds.
The costs and fees involved are:
| Equitable Bank set-up fee | ~$995 |
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| Deeded fee | ~$1,199 |
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| Appraisal fee | ~$300 - $600 (Estimates are based on appraised home value averages) |
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| ILA | ~$500 (Cost may vary depending on lawyer selected) |
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TOTAL Excludes title insurance, which is estimated at approximately $500 (based on Equitable Bank averages). Title insurance varies based on property value. | ~$2,995 - $3,295 |
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Option 3: A closing lawyer of your choosing + ILA
This option is best if you have both a closing and an ILA lawyer that you know and prefer to use. Your closing and ILA lawyer fees are paid directly by you.
The costs and fees involved are:
| Equitable Bank set-up fee | ~$995 |
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| Closing lawyer fee | ~$1,900 (Cost may vary depending on lawyer selected) |
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| Appraisal fee | ~$300 - $600 (Estimates are based on appraised home value averages) |
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| ILA | ~$500 (Cost may vary depending on lawyer selected) |
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TOTAL Excludes title insurance, which is estimated at approximately $500 (based on Equitable Bank averages). Title insurance varies based on property value. | ~$3,695 - $3,995 |
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For more details on the above options, read our “How to close an Equitable Bank Reverse Mortgage” guide.
In summary, your total reverse mortgage fees and costs will vary depending on your home’s value, your selected closing method, and the lender you choose. You can typically expect to incur a total of anywhere from $1,995 to $3,995. These estimates exclude title insurance, which varies based on your property value.
At Equitable Bank, our reverse mortgage specialists are available to answer any questions you may have, with zero obligation. Should you choose to proceed, they’ll be with you for every step of the process.
Once your reverse mortgage is approved and funded, and all costs have been covered, you don’t have to pay tax on the amount of the proceeds you receive—and you’re free to use them any way you choose.