Rates & renewal
A reverse mortgage rate is only one line in a long-horizon cost.
Compare the initial rate, how interest compounds, what happens at renewal, and how the balance changes under different payment choices.
How interest enters the balance
All current Canadian lifetime reverse-mortgage lenders compound interest semi-annually. Interest that is not paid becomes part of the outstanding mortgage balance according to the lender’s terms.
Rate term is not maturity
The rate term is the period for which pricing applies. Mortgage maturity is when the obligation becomes due under the contract. Ask how a lender sets renewal pricing and what choices are available before the initial term ends.
A rate can renew without the mortgage ending.
The Payment Dial changes the path
| Payment approach | Balance effect |
|---|---|
| None | Interest remains in the balance; growth is fastest |
| Some | Balance growth slows |
| More | May address more of the accruing interest, subject to lender rules |
A useful rate comparison
- Annual percentage rate and compounding convention
- Initial term and renewal method
- Prepayment privileges and penalties
- Whether future advances use current or original pricing
- Portability rules and timing
- Total projected balance—not only today’s rate
Questions people ask next
How does reverse-mortgage interest compound?
All current Canadian lifetime reverse-mortgage lenders compound interest semi-annually. Interest that is not paid becomes part of the outstanding mortgage balance according to the lender’s terms, so future interest is calculated on a growing balance.
Read the full explanation →Can I reduce the principal?
Current lifetime products commonly permit an annual principal reduction, often up to 10% of outstanding principal, subject to lender and product terms. The 10% limit refers to permitted principal reduction—not necessarily the size of the cheque when accrued interest must be handled first.
Does the mortgage end when the rate term ends?
Not necessarily. A rate term is a pricing period; mortgage maturity is when the loan becomes due under its contract. A rate can renew without the mortgage ending.
Read the full explanation →Understand. Compare. Act.