Canadian fintech Bloom Finance announced it’s launching the first lifetime fixed-rate reverse mortgage in the country.appleuzr/iStockPhoto / Getty Images
Oh, hi again. In today’s edition, we’re talking about a new reverse mortgage that promises rate stability for life, a partnership that could make sending money abroad easier, and why Canadians are cooling off on GICs.
A new bombshell has entered the (reverse mortgage) villa
Canada’s small but fast-growing reverse mortgage market is getting a shakeup.
Bloom Finance, a Canadian fintech that specializes in reverse mortgages, announced this week it’s launching the first lifetime fixed-rate reverse mortgage in Canada.
If you’ve never looked into reverse mortgages before, here’s the gist: They’re loans that let homeowners aged 55+ tap into up to about 55 per cent of their home’s current value. The money you get is tax-free, doesn’t affect government benefits like OAS or GIS, and you don’t have to make monthly payments. The loan and interest are paid back when you sell your home, move out or pass away.
Reverse mortgages have long been criticized, in part because of the large amount of interest that accrues in the background, and at high rates. The market has expanded rapidly in recent years as more seniors look for ways to stay in their homes despite high living costs and rising interest rates.
Most reverse mortgages offer either variable rates or fixed terms that last up to five years. That means when your term ends, your rate could change, and for retirees living on set incomes, that uncertainty can be nerve-racking.
Bloom says it aims to take that anxiety off the table by locking in your interest rate for life.
Right now, that lifetime rate sits at 6.69 per cent, higher than competitors such as Equitable Bank (6.54 per cent for a five-year fixed term) or HomeEquity Bank (6.64 per cent).
“The reason we did this was to eliminate the uncertainty,” said Ben McCabe, founder and CEO of Bloom. While the rate is fixed once you’ve locked in, the current 6.69 per cent rate will likely fluctuate with 20-year bond yields for new customers, he said.
Bloom will also waive prepayment penalties if you downsize, move into assisted living or pass away. You can even move to another qualifying home and keep your locked-in rate.
That said, if you leave early for other reasons, the penalties are quite steep – starting at 8 per cent in the first year, then dropping a percentage point each year until year five, after which it falls to three months’ interest.
“The reason is because we are locking in money for such a long term,” Mr. McCabe said. “It’s very expensive for us to break the loan.”
The product isn’t for everyone. It’s meant for homeowners planning to stay put long-term, not those who might want to pay off the loan or move within a few years, Mr. McCabe said. “We are really looking for lifetime clients.”
Jason Heath, managing director of Objective Financial Partners, said the appeal is obvious for retirees worried about rising rates. “It’s almost like buying an insurance policy against the risk of interest rates going up,” he said.
But Mr. Heath said you don’t have to make payments on the reverse mortgage during the life of the mortgage. “So, if interest rates do go up, although it might be unpleasant because you’re paying more, your payments don’t increase the same way they could for a conventional borrower.”
Overall, Mr. Heath said this innovation is a win for consumers. “I suspect there will be more and more competition here in Canada from different reverse mortgage providers and more products like this, which give consumers more options,” he said.
Callout
Were you pushed to retire early owing to a personal health issue or to be a caregiver? If you would like to chat, e-mail me at mraman@globeandmail.com.
The Calculator
2.9%
How much term deposit balances – such as GICs – dropped in August year-over-year, according to McVay and Associates’ most recent report. Meanwhile, demand deposit balances – cash sitting in chequing and savings accounts – jumped 8.7 per cent.
What they’re saying: “The interest rates on GICs are looking less attractive as they decline,” said consulting firm owner David McVay. “The competition is moving toward using high-rate savings to attract balances right now, not using GICs.”
The Retirement Receipt
This 63-year-old retired teacher rediscovered city life after moving downtown
The situation: Glenn Cuthbertson retired in 2022 at age 60 after 34 years teaching elementary school. The pandemic’s shift to online learning convinced him it was time. After an emotional farewell, he filled his days with hockey, yoga, computer classes and photography. Knee surgery in 2024 prompted a move from the suburbs to a condo near Toronto’s St. Lawrence Market. Now, with his children and their partners close by, he walks more than ever, often with his son’s dog, Leo.
The numbers: Glenn and his wife, a university professor in phased retirement, have defined-benefit pensions, RRSPs and other investments. Careful budgeting means they haven’t had to cut back, though they still shop thriftily.
His advice: One of the biggest adjustments in retirement is learning how to structure your days. “Morning coffee and a relaxing read are great ways to get the day going, but they can eat up half your day if you let them,” he says. Living downtown has made it easier to stay active and connected. “With my knee replacements, being able to walk without pain has made retirement much more of what I had hoped for,” he says.
Best of the Rest
🏦 A small CPP tweak could fix Canada’s hidden retirement crisis. More than 60 per cent of workers have no pension plan, leaving retirees exposed to inflation and long lifespans. The solution, actuary Bonnie-Jeanne MacDonald proposes, is a one-time “delay guarantee” for those who postpone CPP or QPP. It would remove the fear of “dying early and getting nothing,” encouraging Canadians to wait, and potentially gain $100,000 more over their lifetimes.
🏠 Renovating might sound cheaper than moving, but not always. The average reno now runs $19,000, and older homes often hide costly surprises. For many, high real estate prices make staying put the better deal. But experts warn to budget for the unexpected and compare what you’d spend on selling and buying before picking up a hammer.
🧾 The costly mistake 43 per cent of parents make: They don’t have a will. That means if they die, the courts decide who gets what, and their kids could inherit thousands at 18, ready or not. Estate planners say creating a will doesn’t have to be expensive: Online tools now start around $30 and can prevent years of confusion and court fees.
⚠️ The Globe and Mail has started a new weekly post with the highest savings and guaranteed investment certificate rates. This week, MCAN Financial leads nationally with 3.95 per cent on a five-year GIC term while in savings accounts, Meridian Credit Union’s 4.7-per-cent promotional rate for four months topped the list.
Try This
🌍 Sending money across borders just got easier. Wealthsimple has teamed up with Wise, the global payments platform, to bring international transfers to its chequing accounts, the companies announced this week. According to Wealthsimple’s website, you can send up to $1-million each day.
