A reverse mortgage lets a homeowner aged 55 or over borrow against their home with no required monthly payments. Interest accrues and the balance is repaid when the home is sold, when the last borrower moves out permanently, or from the estate.
In Canada these are offered by a small number of institutional lenders, principally HomeEquity Bank and Equitable Bank.
55 or overMinimum age
No paymentRequired monthly
Legal adviceIndependent and required
Who this suits
- You are 55 or over, own your home, and need income rather than a lump sum obligation.
- You are asset-rich and income-poor, and a conventional mortgage payment would not be affordable.
- You want to stay in your home rather than downsize.
- You have been declined for a conventional mortgage or HELOC because of income.
- You have looked at downsizing, a HELOC and a conventional mortgage, and none of them work.
What to weigh carefully
- Because nothing is paid monthly, the balance compounds, and rates are higher than a conventional mortgage.
- Over fifteen or twenty years it can consume a large share of your equity, which directly reduces what passes to your estate.
- Taking the money in instalments rather than one lump sum slows the compounding.
- Look at downsizing, a HELOC and a conventional mortgage first, and rule them out on numbers rather than assumption.
- Involve your family and your own lawyer in the decision before you sign.
- Independent legal advice is required. Budget for it.
Documents to gather
- Government photo ID for each borrower, confirming age
- Proof of ownership and the current mortgage statement, if any
- Property tax bill and home insurance details
- Independent legal advice certificate, which lenders require
- Details of your existing income sources
How the process runs
- 01 Look at the alternatives firstDownsizing, a HELOC, a conventional mortgage, or nothing at all. We will price the realistic options before recommending this one.
- 02 Model the balance over timeYou should see what the balance looks like in five, ten and twenty years before deciding, not after.
- 03 Involve family and independent counselLenders require independent legal advice. We strongly encourage involving whoever will inherit the home.
- 04 Appraisal, approval and fundingThe amount available depends on age, property value, location and property type.
Want the alternatives priced first?
Start the application, or call 647-505-1096 and talk it through first.
Questions families ask
- Can I lose my home with a reverse mortgage?
- You keep title and cannot be forced out for missing payments, because there are none. You must keep the property taxes and insurance current and maintain the home. Default on those obligations can put the loan in jeopardy.
- How much can I borrow?
- Typically a percentage of the home's value, driven by your age, the property and the location. Older borrowers can access more because the expected term is shorter.
- Will my estate owe more than the house is worth?
- Canadian reverse mortgages generally carry a no-negative-equity guarantee, meaning the repayment is capped at the fair market value of the home when it is sold, provided obligations were met. Confirm the specific wording with the lender and your lawyer.
- Is a reverse mortgage the right choice for me?
- Sometimes, and often not. It suits someone with real equity, limited income and a firm intention to stay in the home long term. If a HELOC or downsizing would work, one of those is usually cheaper. We will tell you which situation you are in.