Reverse Mortgage Pros

The Fraction Mortgage vs A Reverse Mortgage - What Are The Differences And Which Is Right For You?

Discover how the Fraction mortgage works & compares to a reverse mortgage.

Fraction Mortgage Guide

Don't get a Fraction mortgage until you've read our free guidebook to learn about all the options.

Learn the most important secrets, exactly how it works, the best alternatives and the main advantages and disadvantages - you won't find this information anywhere else.

This free guide will give you the real facts.

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Written by a Chartered Accountant - who won several mortgage awards for his free guides.


Award Winning Information You Can Trust

We've won dozens of awards for our mortgage advice - including the prestigious Most Trusted Mortgage Agent in Canada award from the Wealth & Finance Awards.

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Number One Agents Award
Most Trusted Mortgage Agent
CMP Rising Star 2020

Discover The Truth And The REAL Facts

There is a lot of bad information out there about a Fraction mortgage and reverse mortgages - that's why we created our free guidebook to clear up everything you need to know.

Get The Real Pros And Cons

In addition to this, you'll learn:

1. All the positives and negatives - including any pitfalls.

2. How a Fraction mortgage compares to a reverse mortgage.

3. All the key facts that you won't find anywhere else...

"After several hours of research I found the information that I really needed in your free guide in a matter of minutes. Well done and my thanks for that."

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About The Author

Mich Sneddon, CPA CA

I'm a Chartered Accountant (link to my accountancy license) and Mortgage Agent (link to my mortgage license) with Dominion Lending Centres Edge Financial, FSCO License #10710.

I was named one of the top Mortgage Professionals in Canada by Canadian Mortgage Professional magazine and I was nominated for a Canadian Mortgage Award - thanks to all the people I have helped with my free Fraction mortgage and reverse mortgage guides.

Some of the reviews from over 10,350 people who have downloaded my free guide:


Thanks for all the info. I have downloaded the booklet which was very informative. Thanks.

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What Is A Fraction Mortgage?

What Is A Fraction Mortgage In Canada

A Fraction appreciation mortgage is a specialist home loan available to many home owners (regardless of age) which let's you borrow a maximum of either 35% or 45% of your home's value. Unlike other mortgages, it doesn't require regular monthly payments. The key features:

  • Anyone of any age with an average or better credit score can qualify.

  • No monthly payments are required.

  • The maximum amount you can borrow is 45% of the value of your home.

  • Interest is charged but added to the amount owed, instead of being paid.

  • The interest rate is tied to how much your home goes up in value.

The key component is the interest rate - which has a minimum amount (that is very competitive) but goes up if your home value goes up.

In this way, it can be considered 'fair' in that you only pay more interest when your home goes up in value (unlike every other mortgage in Canada - which is charged at a set interest rate, regardless of what happens to your home value).

Fraction Mortgage vs Reverse Mortgage

While a Fraction mortgage can be used by the self employed, anyone of any age or investors - a common comparison is made between it and reverse mortgages.

This is because a reverse mortgage is the most similar product that exists - the only other one on the market that doesn't require monthly payments and is designed to allow easy access to your net worth stored in your home.

As the leading expert on reverse mortgages in Canada - having helped more Canadians than anyone else out there - I created this guide to help you decide if a Fraction mortgage is a good alternative to a reverse mortgage.


What About An RBC Reverse Mortgage Or Other Lenders?

At present, the "Big 5" Canadian banks - RBC, BMO, CIBC, Scotiabank and TD do not offer a reverse mortgage or a Fraction mortgage.

The fraction mortgage is only offered by Fraction themselves - this is their brand name.

A reverse mortgage is only offered by 3 lenders: Home Equity Bank - with their CHIP reverse mortgage (official website - is www.chip.ca) who are a regulated and Schedule I chartered bank in Canada - as well as Equitable Bank mortgage (official website is www.equitablebank.ca) with their Equitable PATH Home Plan Reverse Mortgage - and finally the Bloom reverse mortgage (official website is bloomfin.ca/product) with their Bloom Reverse Mortgage.

Manulife also has a product that can work in a similar way to a Fraction mortgage or reverse mortgage - please contact us if you are interested in learning more about this.

What About Interest Rates?

As noted, the interest rate depends on how much your home goes up in value. Contact us to confirm what the latest rates are and how this works - the free guide will also explain it more.


Award Winning Information You Can Trust

We've won dozens of awards for our mortgage advice - including the prestigious Most Trusted Mortgage Agent in Canada award from the Wealth & Finance Awards.

Better Business Bureau logo
Number One Agents Award
Most Trusted Mortgage Agent
CMP Rising Star 2020
Get Your Free Guidebook

Other Frequently Asked Questions

Click on the question to reveal the answer.

You can still take this out if you have a mortgage on your property. It would be the exact same process that you'd go through in taking your mortgage to another lender - they will simply replace your existing loan (essentially moving it to another lender). You'd then get to keep any excess money available. Check out this article on the top misconceptions for more like this: read our article on the top 8 misconceptions.

A reverse mortgage allows you to move away from having to make monthly mortgage payments while still gaining access to the equity in your home. If you are considering a reverse mortgage, make sure you take a look at the guide.

CHIP stands for the Canadian Home Income Plan (CHIP) - this refers to the reverse mortgage offered by Home Equity Bank (it is what this was previously called before it was changed to CHIP reverse mortgage). The name was changed to the CHIP reverse mortgage to more accurately reflect the type of loan this is (it is a mortgage, after all, and takes into account your home equity, since you are accessing the equity in your home).

For more on the history of Home Equity Bank and the reverse mortgage product, the 400 year history of the reverse mortgage.

There are now 2 other reverse mortgage lenders in Canada - the Bloom reverse mortgage and Equitable Bank PATH reverse mortgage. There is another alternative called the Fraction mortgage that is quite similar to reverse mortgages in some ways.

There are 3 key factors in deciding how much you qualify for under a reverse mortgage: (1) The value of your home, (2) Your age and (3) The property type. You may qualify for as much as 55% of your home equity - that is the maximum available in Canada for a reverse mortgage.

We've tried to cover everything on how reverse mortgages work in the guide, including different reverse mortgage lenders, alternatives to long term care (allowing you to live in the home you love with a product that gives you access without having to sell your home)

For all the advantages and disadvantages of a reverse mortgage, I suggest you check out our free article on the pros and cons. It outlines everything you need to know.

Reverse mortgages give you the chance to access your home equity without the risk of losing your home. But, it's important to look at the pros and cons.

We believe in this product which allows you to keep your home, but want to make sure you have all the facts and answers - things like what happens when a borrower dies, understanding that the reverse mortgage is a loan, the comparison to a regular mortgage, and more. Which is why we wrote the article above. Give it a read and let us know of any questions you have!

I am a licensed mortgage agent with Dominion Lending Centres Edge Financial - FSCO License #10710. I am also a certified Chartered Accountant. In 2017 I was also named one of the top Mortgage Professionals in Canada (under 35) by Canadian Mortgage Professional magazine largely because of my work on the reverse mortgage product.

Our mortgage brokerage is independently owned and operated - this means that you get independent, objective and professional advice on all of your financial needs. We don't work for any bank or lender - you are our client. I personally created this website - Reverse Mortgage Pros - so that it could a hub and provide all the information and advice that anyone would ever need.

We are also affiliated with Dominion Lending Centres - the number one company in Canada for any kind of mortgage loan, not just a reverse mortgage and registered with the Better Business Bureau.

Just so you have it in black and white: our guide, our free 90 second reverse mortgage assessment and all the advice and recommendations we provide you regarding a reverse mortgage are completely free - you will never pay us a penny ever for any of our reverse mortgage advice.

Reverse mortgages can be an incredibly useful option to access the value of your home, depending on your situation. But it's important to look at the cost of reverse mortgages and weigh them against your other options, including how it works with reverse mortgage interest, and more.

If you are interested in the costs and fees of a reverse mortgage, check out our article on reverse mortgage in Canada - costs and fees. We cover everything in there, including how it works (including whether you want to make monthly mortgage payments or not) and more.

The free guide is a PDF file (opens with Adobe or any PDF or eBook reader). I will email it to you immediately. I will also continue to send you other free tips, tricks and advice to help you make your decision with regards to a reverse mortgage - you can unsubscribe any time if the free guide is more than enough for your needs.

We have written an article examining the alternatives, including a home equity line of credit, to compare them to reverse mortgages in more detail.

Since we are independent - we don't work for either Home Equity Bank, Bloom, Fraction or Equitable Bank - we want to make sure that you see all of the options out there, and see what the reverse mortgage allows you to do. We have done our best to lay out all of the factors, including the closing costs, when you have to repay the loan, how it works to access the value of your home, how the fair market value of your home is assessed, and how you qualify. Take a look at our article above to learn more!

While with reverse mortgages, it is much easier to get than any other kind of home equity loan, since we are still talking about lending large amounts of money, this does not make it a walk in the park. The companies that offer this - Home Equity Bank, Bloom, Fraction and Equitable Bank - are either Schedule I banks or funded by Schedule I banks (the highest level in Canada - the same as RBC, BMO, CIBC, Scotiabank and TD) - so they do require some paperwork. There are factors to ensure that you are eligible for a reverse mortgage, including that you must ber at least 55 years old, as mentioned above, as well as an assessment of the value of your home, whether you are going to make monthly mortgage payments, and more. For more on the requirements, please get in touch with us.

For reverse mortgages in Canada, we've got you covered. But for our real estate resources, I suggest you check out our sister sites:

For Pre Construction Condos & Townhouses (if you're thinking of downsizing, these are a great option), check out Pre Construction Pros

For traditional mortgages, if you're able to qualify for one and just want a 'normal' mortgage or Home Equity Line of Credit, seeGTA Mortgage Pros

For regular buying and selling of homes and finding good Real Estate Agents, you should check out GTA Real Estate Pros

If you have any further questions then please let me know! I hope you found some value from this.

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Last updated: 14th March 2022