Understanding Your Reverse Mortgage Statement: A Line-by-Line Breakdown

Does your reverse mortgage statement look like a foreign document? You're not alone. Many Ontario homeowners receive their monthly or quarterly statements and feel confused by the terminology, interest calculations, and balance updates. Understanding what each line means gives you peace of mind and helps you make informed decisions about your loan.

This article is for educational purposes only and does not constitute financial advice.

This guide breaks down every section of a typical reverse mortgage statement so you know exactly what you're looking at.

The Statement Header: Loan Identification

The top of your statement identifies the loan itself:

Loan Number — Your unique reverse mortgage account number. Always reference this when contacting your lender.

Borrower(s) — The name(s) of the person or people on the loan. If you're married or partnered, both names should appear here.

Property Address — The address of the home securing the reverse mortgage. Verify this is correct — it should match your principal residence.

Statement Date — The date the statement was prepared. Statements are typically issued monthly or quarterly, depending on your lender's schedule.

Statement Period — The date range covered by this statement. For example, "January 1 – January 31, 2026."

Loan Balance Section

This is the heart of your statement. Here's what you'll see:

Item	What It Means
Previous Balance	The amount you owed at the start of the statement period
Interest Accrued	Interest added to your loan balance during this period
Lender Fees	Any maintenance or annual fees charged this period
Principal Advance	Any new money you withdrew during the statement period
Payments Made	Money you paid toward the loan (if applicable)
Current Balance	What you owe right now (Previous Balance + Interest ± Advances ± Payments)

The most important number is your Current Balance. This is what you (or your estate) will owe when the loan is repaid — either when you sell, move, or pass away.

Why Does Interest Compound?

Interest compounds on reverse mortgages, meaning you pay interest on your interest. Here's a simple example:

Month	Balance	Interest (7%)	New Balance
Month 1	$100,000	$583	$100,583
Month 2	$100,583	$586	$101,169
Month 3	$101,169	$589	$101,758

Notice how the interest amount grows each month even though you didn't borrow any new money. After 10 years, this compounding effect means the balance can nearly double.

According to the Financial Consumer Agency of Canada (FCAC), reverse mortgage borrowers remain responsible for all accrued interest, and this amount is deducted from the home's equity when the loan is repaid.

Available Credit and Draws Section

If you have a line of credit (LOC) reverse mortgage, your statement shows how much you can still access:

Item	Meaning
Total Credit Available	The maximum you approved to borrow
Amount Advanced to Date	How much you've already withdrawn
Remaining Available	How much you can still draw (Total Available – Amount Advanced)

Many homeowners use this to understand their financial flexibility. If you have $100,000 in total available credit and have drawn $30,000, you still have $70,000 available for future needs.

Important: Just because the credit is available doesn't mean you must use it. Many homeowners keep their credit line available as an emergency fund.

Interest Rate Information

Your statement should clearly show:

Interest Rate — Your current rate (e.g., 7.65%). This rate may be fixed or variable depending on your product.

Rate Type — "Fixed" or "Variable." Fixed rates don't change. Variable rates fluctuate with the market.

Next Rate Review Date — The date your rate will be reviewed or adjusted (if you have a variable rate).

Compounding Frequency — How often interest is added to your balance. Most reverse mortgages compound monthly.

Payment and Activity History

Most statements include a summary of activity during the statement period:

Transaction	Amount	Date
Previous Balance	–	Jan 1, 2026
Interest Accrued	$583	Jan 31, 2026
Payment Received	$2,500	Jan 15, 2026
Current Balance	–	Jan 31, 2026

This section shows exactly when you made payments (if you're paying voluntarily) and when interest was added.

Projected Balance Information

Some lenders include a projection table showing what your estimated balance will be at future dates if nothing changes:

Year	Projected Balance	Home Value (assumed)	Your Equity
2026	$100,000	$650,000	$550,000
2031	$128,000	$650,000	$522,000
2036	$164,000	$650,000	$486,000

These are estimates only — your actual balance will differ based on how much you withdraw, market interest rates, and your home's actual appreciation.

Fees and Charges Section

Review this section carefully to ensure you understand all costs:

Annual Maintenance Fee — A yearly charge (typically $0–$300+) for account maintenance. This is added to your loan balance.

Appraisal Fee — One-time fee for the home appraisal (typically $300–$500), usually charged upfront or at closing.

Legal Fees — Cost of independent legal advice (required in Ontario). Usually $800–$2,000, charged at closing.

Lender Fees — Any other fees specific to your lender's product.

According to Rick Sekhon Reverse Mortgages, understanding your fee structure upfront helps you plan for the true cost of borrowing.

Key Ratios to Monitor

Smart homeowners track two key numbers on their statement:

Loan-to-Value (LTV) Ratio = Current Loan Balance ÷ Home's Current Value

Example: If you owe $100,000 and your home is worth $650,000, your LTV is 15.4%.

Equity Cushion = Home Value – Loan Balance

Example: $650,000 – $100,000 = $550,000 remaining equity.

Monitor your equity cushion to ensure you have flexibility for future needs. If your balance grows significantly, you may want to consider making payments to slow the growth.

What If Something Looks Wrong?

If a statement shows a charge or balance you don't recognize:

✓ Contact your lender immediately — Call the customer service number on your statement ✓ Request clarification — Ask for a detailed explanation of any unfamiliar fees ✓ Verify your calculations — Use the previous balance + interest ± advances formula to double-check the math ✓ Review your loan documents — Reference your original mortgage agreement to confirm fees and interest rates match ✓ File a complaint if needed — Contact FSRAO (Financial Services Regulatory Authority of Ontario) if you believe there's an error

Frequently Asked Questions

Why does my balance increase even though I haven't borrowed more money?

Interest compounds monthly. Your balance grows because you're accruing interest on the outstanding loan balance. This is how reverse mortgages work — you don't make monthly payments, so interest accumulates.

Can I pay down my reverse mortgage balance to reduce interest?

Yes. Many lenders allow voluntary payments with no penalty. Making payments reduces the principal balance, which slows the compounding effect and reduces the total interest you'll owe.

What if the interest rate on my statement is different from what my lender quoted me?

If you have a variable rate, rates change with market conditions. If you have a fixed rate and it's changed, contact your lender — there may be an error, or your rate may have adjusted at renewal.

How often should I review my statement?

Review it when you receive it — monthly or quarterly, depending on your lender. Many homeowners set a calendar reminder to check their statement and verify the balance is tracking as expected.

What's the difference between my loan balance and the money I actually owe?

Your loan balance is what's owed if you repay right now. When you do repay, you'll also owe accrued interest between the last statement date and the actual repayment date.

Speak to a licensed mortgage professional. Independent legal advice is required before closing a reverse mortgage in Ontario.

Ready to understand your reverse mortgage better? Contact Rick Sekhon Reverse Mortgages to discuss your statement and explore options for managing your loan strategically.

Get your free Ontario Reverse Mortgage Guide →

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This content is for illustrative purposes only. Rates may vary. Call Rick Sekhon for the best rates and more information.