What Is a Reverse Mortgage?
A reverse mortgage allows homeowners aged 55 and older to access the equity in their home without selling or making monthly mortgage payments.
Instead of making payments to the lender, the lender advances funds to you based on the value of your home and your age. The loan is typically repaid when the home is sold, the homeowner moves out, or the last borrower passes away.
Reverse mortgages in Canada are commonly offered by lenders such as HomeEquity Bank (through the CHIP Reverse Mortgage) and Equitable Bank.
For many homeowners, a reverse mortgage provides a way to turn home equity into tax-free cash while continuing to live comfortably in the home they love.
Who Is a Reverse Mortgage For?
A reverse mortgage can be a helpful option for homeowners who:
- Are 55 years or older
- Have significant equity in their home
- Want to access tax-free funds
- Prefer not to make monthly mortgage payments
- Want to age in place instead of selling their home
- Cannot qualify for a traditional refinance due to income requirements
For many retirees, their home is their largest financial asset. A reverse mortgage allows them to access that equity without having to move or disrupt their lifestyle.
How Much Can You Borrow?
The amount you can borrow depends on several factors including:
- Your age
- Your home value
- Your location
- Current interest rates
Typically, homeowners can access up to approximately 55% of their home’s value.
Funds can be received as:
- A lump sum
- Regular payments
- A combination of both
This flexibility allows homeowners to structure the reverse mortgage in a way that supports their financial goals.
What Can Reverse Mortgage Funds Be Used For?
Homeowners often use reverse mortgage funds to:
- Eliminate existing mortgage payments
- Pay off high-interest debt
- Cover home renovations or accessibility upgrades
- Supplement retirement income
- Help family members with a down payment
- Cover unexpected expenses
- It’s your money and you can spend it as you choose
Because reverse mortgage funds are considered loan proceeds, they are not taxable income.
Do You Still Own Your Home?
Yes.
With a reverse mortgage, you remain the owner of your home and continue to benefit from any future increases in property value.
As long as you:
- Maintain the property
- Keep property taxes and insurance up to date
- Continue living in the home as your primary residence
you can stay in your home for as long as you choose.
What Happens When the Home Is Sold?
The reverse mortgage is typically repaid when:
- The home is sold
- The homeowner moves
- The last borrower passes away
At that time, the loan balance (principal plus accumulated interest) is repaid from the proceeds of the sale.
Importantly, Canadian reverse mortgages include a no negative equity guarantee, meaning you will never owe more than the value of your home when it is sold.
Why Work With a Mortgage Broker for a Reverse Mortgage?
Reverse mortgages are a specialized financial product, and it’s important to understand both the benefits and the long-term implications.
Working with a mortgage broker means:
- You receive unbiased advice
- We help determine whether a reverse mortgage is the best option, or if alternatives such as refinancing or a HELOC may be better
- We compare options between lenders
- We structure the solution around your retirement and financial goals
Our goal is to ensure you make a decision that supports your lifestyle today while protecting your future financial security.
Is a Reverse Mortgage Right for You?
A reverse mortgage can be a powerful financial tool when used properly — but it’s not the right solution for everyone.
If you’re considering accessing your home equity, we can review your options and help you determine whether a reverse mortgage, refinance, or another strategy is the best fit.
Book a consultation today to explore your options.