Help! What’s a reverse mortgage?

Many people do not fully understand what a reverse mortgage is. In fact, the concept is quite simple. A senior homeowner borrows against the equity in his or her home in almost the same fashion as in a conventional home equity financing. Once the reverse mortgage transaction closes, the borrower never has to make any interest or amortized principal payments to the lender.

​Of course, it is quite wrong to think that the homeowner never pays interest or does not repay the principal borrowed. In actual fact, the borrower has to pay back the principal and interest borrowed, but in a reverse mortgage all such payments are deferred – in effect, capitalized into a lump-sum payment due when the borrower dies or sells the property.

​In return for never having to make any mortgage payments in his or her lifetime, the borrower pays for a rapidly growing mortgage debt and a drain of his/her remaining home equity. This is in contrast with a conventional mortgage where the owner must make monthly mortgage payments of principal and interest, but knows that his or her mortgage debt will never grow.

​Reverse mortgages are typically marketed to senior borrowers – the last time we looked, in Canada, the minimum age for a reverse mortgage was around 55 years old.

​With conventional mortgage lending, a 75 per cent loan-to-value ratio is common. In contrast with reverse mortgages, the homeowner can only borrow up to 50 percent of the value of the property. This extra “equity buffer” gives the reverse mortgage lender some comfort that there will be enough equity left over to pay off the accrued interest and principal when the homeowner finally dies or sells.

​Some advisors criticize reverse mortgages on the grounds that reverse mortgages can end up by luring seniors into rash borrowing decisions with the appeal of “no payments ever” only to see them left with small loan proceeds, depleting home equity, and an overall higher net cost of borrowing.

​Despite this, demand for reverse mortgages continues to grow. Before entering into such a transaction, as a safeguard, it is only prudent to have your family lawyer give you advice on the proposed transaction beforesigning up. As always, CAVEAT EMPTOR (let the buyer beware) is the best policy.

© The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Tax Law

​If you are one of thousands of Canadians who have failed to file taxes for several years the answer maybe to seek amnesty. Be aware that failure to file for more than one year if you owe taxes is a criminal offence and you may be criminally prosecuted.

The CRA Voluntary Disclosure Program allows taxpayers to come forward and obtain immunity from prosecution and most civil penalties, provided certain conditions are met.

We specialize in lawyer-negotiated tax debt settlements and tax amnesties with federal and provincial tax authorities, offering taxpayers a much-needed resource for the resolution of situations that all too often put personal and financial lives at risk. We stand as your protector, defender, and advocate to ensure that you the taxpayer, receive the best treatment possible. 

We offer solutions for tax problems such as:

  • Unreported income
  • Unfiled tax returns
  • Payment arrangements
  • Unpayable tax debt
  • Tax dispute litigation
  • Criminal tax defense

Wills, Estates & Trusts

​We offer the following will, estate and trust services for individuals and business-owners:

  • Wills
  • Preparation of trust agreements
  • Powers of attorney
  • Estate administration
  • Probate
  • Representation in estate driven litigation
  • We currently offer a special time limited package for one will and two powers of attorney (property and personal care) for $295 plus HST

Real Estate

We can assist you with all your real estate needs including:

  • Drafting agreements
  • Purchases and Sales
  • Title transfers
  • Leases

Tax Debt Relief

With the coronavirus pandemic leaving many in a precarious and dire financial situation, it is essential that you protect yourself financially. If you have a large, unpayable tax bill, we can help. We act in the best interest of the tax debtor. Unlike us, insolvency trustees represent not only you but your creditors (ie- the tax collector). The more tax you pay, the more trustees earn. Our goal through leveraged negotiations, is to reduce your tax debt.

Please consult our blog post Protecting Your Assets from Creditors for more information.

Business & Tax Planning

If you do not already have a certified financial planner, we can provide one or more highly qualified people who can work closely with us to assist you with such matters as:

  • Resident and non-resident corporate restructuring
  • Optimum use of holding corporations
  • Continuity and succession planning
  • Tax-free transfers
  • Losses and ABIL planning
  • Making interest tax deductible
  • Small business planning

Corporate & Commercial Law

We have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:

  • Incorporations and corporate governance
  • Corporate reorganizations and transactions for the directors and shareholders
  • Negotiation and drafting of agreements, professional corporations, minute book maintenance

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Joyce Bruno

EXECUTIVE LEGAL ASSISTANT

Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.

Paul DioGuardi

B.A., LL.B, Queen’s Counsel

Paul obtained his Law Degree from Queen’s University in 1964.  He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy