What does it mean to obtain reverse mortgage with an existing mortgage (while still repaying the home loan) ?
Obtaining a reverse mortgage with an existing mortgage means that a homeowner who is still paying off a traditional home loan applies for a reverse mortgage to replace or supplement that debt.
Normally, a reverse mortgage allows older homeowners (typically age 62+ or age 55+ ) to access equity built up in their home, but when a homeowner already has a mortgage balance, the reverse mortgage proceeds must first be used to pay off the existing loan.
A reverse mortgage with an existing mortgage, in practice, means also that when the reverse mortgage is approved, the first lump sum from the reverse mortgage goes directly toward clearing the outstanding balance of the original mortgage; only after that debt is satisfied can the homeowner use any remaining equity as cash, monthly payments, or a line of credit.
The arrangement is significant because it allows homeowners who are struggling with monthly mortgage payments to eliminate those ongoing obligations. Once the existing mortgage is paid off, they no longer owe monthly installments on the reverse mortgage, freeing up cash flow.
How to become eligible for a reverse mortgage with an existing mortgage ?
To become eligible for a reverse mortgage when you already have a mortgage, you must meet both the general requirements for reverse mortgages and some specific conditions related to your current home loan. Here’s a breakdown:
1. Meet Basic Reverse Mortgage Requirements
- Age: In most countries, at least one borrower must be a minimum age (62+ in the U.S., 55+ in Canada and the UK).
- Primary Residence: The home must be your principal residence, not a vacation home or rental.
- Property Type: Eligible homes usually include single-family houses, 2–4 unit properties (if you live in one unit), FHA-approved condos, or certain manufactured homes.
- Equity Requirement: You need substantial equity in the property. Reverse mortgages are designed for homeowners who have already paid down most (or all) of their mortgage.
2. Condition on the Existing Mortgage
- Must Pay Off Current Mortgage: You cannot keep both loans running side by side. The reverse mortgage must first pay off the existing mortgage balance in full at closing.
- Equity Check: If your existing mortgage balance is too high compared to your home’s value, you may not qualify because the reverse mortgage won’t cover it. In that case, you’d have to bring cash to closing to make up the difference.
3. Financial & Legal Obligations
- Ability to Cover Ongoing Costs: Even though you won’t have to make monthly loan repayments, you’re still responsible for property taxes, homeowners insurance, and maintenance. Lenders check your income and credit to ensure you can handle these obligations.
- Counseling Requirement: In the U.S., borrowers must complete an independent HUD-approved counseling session before approval. Other countries may require similar financial advice or disclosures.
Which lending companies provide with reverse mortgage despite an existing homeloan for same property (USA, UK and Canada)?
Here are the specific lenders and providers in the USA, UK, and Canada that offer reverse mortgage or equity-release products—even when you still have an existing mortgage on the property.
United States – HECM & Reverse Mortgage Lenders
These lenders offer FHA-insured Home Equity Conversion Mortgages (HECMs), which allow homeowners with existing mortgages to replace that debt with a reverse mortgage:
- Finance of America Reverse (FAR)
- Mutual of Omaha Mortgage
- Longbridge Financial
- PHH Mortgage
- Fairway Independent Mortgage Corporation
- Guild Mortgage
- Plaza Home Mortgage
- One Reverse Mortgage
- Reverse Mortgages.com
- America’s lenders like Liberty Home Equity Solutions, HighTechLending, Movement Mortgage, etc.
United Kingdom – Equity Release / Lifetime Mortgage Providers
In the UK, reverse mortgage products are known as equity release or lifetime mortgages. The major, FCA-authorized providers—including those compliant with Equity Release Council standards—are:
- Aviva.Aviva.co.uk
- Legal & General
- Liverpool Victoria (LV=)
- More2Life
- Royal London
- Canada Life
- Just (formerly Just Retirement)
- Pure Retirement
- Standard Life
- LiveMore
- OneFamily
- Hodge Lifetime (among others listed in various expert reviews)
Canada – Reverse Mortgage Lenders
Canada’s reverse mortgage market is concise, with only two major providers offering products that can pay off existing mortgages:
- HomeEquity Bank (CHIP Reverse Mortgage) — widely available across most provinces.
- Equitable Bank — offers reverse mortgages in select provinces such as BC, Ontario, Quebec, and Alberta.