Reverse Mortgages in Canada
Access your home equity while staying in your home
If you're 55 or older and own your home, a reverse mortgage allows you to convert a portion of your home's equity into tax-free cash without having to sell your home or make monthly mortgage payments. Lenderoo shops 40+ lenders and connects you with a top mortgage professional - free, and on your side.
What is a Reverse Mortgage?
A reverse mortgage is a loan that allows Canadian homeowners aged 55 and older to borrow against the equity in their home without having to sell or move. Unlike a traditional mortgage where you make monthly payments to the lender, with a reverse mortgage, the lender pays you.
Borrow Against Your Equity
Access up to 55% of your home's value based on your age and home value
No Monthly Payments Required
You don't have to make monthly mortgage payments as long as you live in your home
Age Requirement: 55+
You must be at least 55 years old to qualify for a reverse mortgage in Canada
Tax-Free Funds
The money you receive is tax-free and doesn't affect OAS or GIS benefits
How Reverse Mortgages Work
Must be 55+ years old and own your home. The youngest homeowner determines eligibility.
Submit your application with required documents. We'll assess your home value and determine your borrowing amount.
Choose to receive your money as a lump sum, monthly payments, or a line of credit.
Continue living in your home with no monthly mortgage payments required.
Interest is added to your loan balance over time. No payments are due while you live in the home.
The loan is repaid when you sell the home, move out permanently, or pass away.
Types of Reverse Mortgages and Alternatives
The Canadian Home Income Plan (CHIP) is the most popular reverse mortgage product in Canada, offered through HomeEquity Bank.
- Borrow up to 55% of home value
- No monthly payments required
- Guaranteed property ownership
A HELOC allows you to borrow against your home equity, but requires monthly interest payments.
- Lower interest rates
- Requires monthly payments
- Credit approval needed
Sell your home to a company and lease it back, allowing you to stay while accessing equity.
- Access full home value
- No longer own your home
- Pay monthly rent
Eligibility Requirements
You must be at least 55 years old. If there are multiple homeowners, the youngest must be 55+.
You must own your home outright or have significant equity built up in your property.
Eligible properties include single-family homes, townhouses, and some condos in approved areas.
Your home must have sufficient equity to qualify. Generally, you need at least 25% equity.
While credit is considered, it's not heavily weighted. Even with poor credit, you may still qualify.
Advantages and Disadvantages
Advantages
Stay in Your Home
Continue living in your home for as long as you wish
No Monthly Payments
No mortgage payments required while you live in the home
Tax-Free Funds
Money received is tax-free and doesn't affect government benefits
Flexible Payment Options
Choose lump sum, monthly payments, or line of credit
No Negative Equity
You'll never owe more than your home is worth
Credit Not a Barrier
Easier to qualify than traditional mortgages
Disadvantages
Higher Interest Rates
Interest rates are typically higher than traditional mortgages
Reduces Home Equity
Decreases the equity you have in your home over time
Setup Fees and Costs
Appraisal, legal, and administrative fees can be significant
Impact on Inheritance
Reduces the value of the estate left to heirs
Early Repayment Penalties
May face penalties if you pay off the loan early
Must Maintain Property
Required to keep up with property taxes and maintenance
How Much Can You Borrow?
The amount you can borrow depends on several factors. Generally, you can access between 25% to 55% of your home's appraised value.
Factors That Determine Your Borrowing Amount:
- Your Age: Older homeowners can typically borrow more (up to 55% for those 80+)
- Home Value: Higher home values mean larger potential loans
- Location: Properties in major urban areas may qualify for higher amounts
- Property Type: Single-family homes typically qualify for more than condos
Note: The exact amount you can borrow will be determined after a home appraisal and assessment of your specific situation.
Payment Options
Receive the full amount of your reverse mortgage in one payment.
- Immediate access to funds
- Good for large expenses
- Simple one-time payment
Receive regular monthly payments to supplement your income.
- Steady income stream
- Budget-friendly approach
- Predictable cash flow
Access funds as needed, only paying interest on what you use.
- Maximum flexibility
- Pay interest only on used funds
- Emergency fund option
Costs and Fees
While reverse mortgages can provide valuable access to your home equity, it's important to understand the associated costs:
Setup Fees
Includes application fees, appraisal costs, and administrative charges. Typically $1,500-$3,000.
Legal Fees
Independent legal advice is required. Expect $500-$1,500 in legal costs.
Interest Rates
Typically 1-2% higher than traditional mortgages. Rates vary based on payment option chosen.
Home Appraisal
Required to determine your home's current market value. Usually $300-$500.
Early Discharge Penalties
If you repay the loan within the first 3 years, you may face penalties of 3-5% of the borrowed amount.
Common Uses for Reverse Mortgages
Use the funds to boost your monthly income and maintain your standard of living in retirement.
Pay for healthcare costs, medications, home care, or medical equipment not covered by insurance.
Fund home improvements, accessibility modifications, or repairs to age in place comfortably.
Eliminate your existing mortgage, credit card debt, or other loans to reduce monthly expenses.
Provide financial assistance to children or grandchildren for education, home purchase, or other needs.
Fund travel, hobbies, or other retirement dreams you've been putting off due to financial constraints.
Is a Reverse Mortgage Right for You?
A reverse mortgage may be a good fit if you:
Are 55 years of age or older
Own your home outright or have significant equity
Plan to stay in your home for the foreseeable future
Need additional income to cover living expenses
Want to avoid monthly mortgage payments
Are comfortable with reduced home equity over time
A reverse mortgage may NOT be right for you if:
You plan to move within the next few years
You want to leave your home as an inheritance
You can't afford property taxes and home maintenance
You qualify for better financing options (like a traditional mortgage or HELOC)
You're looking for a short-term financial solution
Alternatives to Reverse Mortgages
Before committing to a reverse mortgage, consider these alternative options:
Sell your current home and purchase a smaller, less expensive property. Keep the difference to fund retirement.
Borrow against your equity with a revolving line of credit at lower interest rates.
Refinance to a lower rate or extend your amortization to reduce monthly payments.
Generate income by renting a basement suite, room, or secondary dwelling on your property.
Impact on Estate and Heirs
It's important to understand how a reverse mortgage affects your estate and what it means for your heirs:
What Happens When You Pass Away or Move
When you pass away or permanently move out of your home, your estate or heirs have several options:
- •Repay the loan and keep the home: Your heirs can pay off the reverse mortgage balance and retain ownership of the property
- •Sell the home: The home can be sold, with proceeds going to repay the loan. Any remaining equity goes to your estate
- •Let the lender sell: If heirs don't want the property, the lender can sell it to recover the loan amount
No Negative Equity Guarantee
Canadian reverse mortgages come with a no negative equity guarantee. This means your estate will never owe more than the home's market value at the time of sale, even if the loan balance exceeds the home's value. This protection ensures your heirs won't inherit debt from the reverse mortgage.
Communicating with Family
It's recommended to discuss your reverse mortgage plans with your family and heirs. This ensures everyone understands the decision and its implications for the estate. Consider involving them in the decision-making process and consulting with a financial advisor together.
Important Consideration
While a reverse mortgage reduces the equity available to heirs, it allows you to enjoy your home equity during your lifetime. Many seniors find this trade-off acceptable, especially if they need the funds to maintain their quality of life in retirement.
Reverse Mortgage Calculator
Get an estimate of how much you could borrow with a reverse mortgage
Must be 55 or older
Estimated market value
Leave blank if none
How you want to receive funds
Disclaimer: This calculator provides estimates only. Actual amounts may vary based on your specific situation, current interest rates, home appraisal, and lender requirements. Contact us for a personalized quote.
Client Success Stories
See how reverse mortgages have helped Canadian homeowners
"The reverse mortgage allowed us to pay off our existing mortgage and still have funds left over for home renovations. We can now age in place comfortably without worrying about monthly payments."
Margaret & Robert T.
Toronto, ON - Age 68 & 71
"I was worried about running out of savings in retirement. The reverse mortgage gave me peace of mind with a steady monthly income, and I don't have to worry about making mortgage payments anymore."
Linda S.
Vancouver, BC - Age 73
"We used our reverse mortgage to help our grandson with university tuition and still had enough to take that trip to Europe we'd been dreaming about. Best decision we ever made!"
James & Patricia M.
Calgary, AB - Age 67 & 65
Questions & Answers
Frequently Asked Questions
Straight answers about reverse mortgages for Canadian homeowners 55+ - how much you can access, what it costs, and what it means for your home and estate.
Ready to Access Your Home Equity?
Get a free, no-obligation quote and discover how much you could borrow with a reverse mortgage. Our experts are here to answer all your questions and guide you through the process.