If you’re 55 or older and own your home, a reverse mortgage may be the right solution for you. You may be able to access a portion of the equity in your home without having to make regular monthly mortgage payments.
Depending on your age, property value, location, and the lender, you may be able to access up to 59% of your home’s value. The funds you receive are generally tax-free and can be used to supplement retirement income, pay off debt, cover renovations or unexpected expenses, or help you achieve other financial goals.
Our reverse mortgage specialists will help you compare your options and guide you step-by-step through the mortgage process.
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Reverse Mortgages for Canadians 55 and Up: Example
A client owns a home valued at $600,000. Based on his age, the property, and current lending guidelines, he qualifies to borrow up to 50% of the home’s value, or $300,000, through a reverse mortgage.
He has several options for accessing the available funds:
- Line of Credit: Access funds as needed, with interest charged only on the amount borrowed.
- Monthly Payments: Receive regular scheduled payments to help supplement monthly income.
- Lump Sum: Receive some or all of the available funds upfront in a single payment.
For example, if he borrowed $200,000 over time, interest would accrue on the outstanding balance. If he later decided to downsize and sold the home for $600,000, the total reverse mortgage balance, including accrued interest and any applicable fees, would be repaid from the sale proceeds. The remaining equity would belong to him.
For illustration, if the total amount owing at the time of sale was $200,000, approximately $400,000 of equity would remain before real estate commissions, legal fees, and other selling costs.
This example is for illustration purposes only and does not include all fees, interest charges, property value changes, or other factors that may affect the final outcome. Working with an experienced mortgage professional can help you understand the available options and determine whether a reverse mortgage is appropriate for your financial goals.
Ontario Reverse Mortgage Calculator
$212,500.00
| Year | Loan Balance (CAD) | Remaining Home Equity (CAD) |
|---|---|---|
| 0 | $212,500.00 | $287,500.00 |
| 1 | $223,125.00 | $276,875.00 |
| 2 | $234,281.25 | $265,718.75 |
| 3 | $245,995.31 | $254,004.69 |
| 4 | $258,295.08 | $241,704.92 |
| 5 | $271,209.83 | $228,790.17 |
| 6 | $284,770.32 | $215,229.68 |
| 7 | $299,008.84 | $200,991.16 |
| 8 | $313,959.28 | $186,040.72 |
| 9 | $329,657.25 | $170,342.75 |
| 10 | $346,140.11 | $153,859.89 |
Please note that the amount you may qualify to borrow is based on several factors, including your age, property value, location, and current lending guidelines. This calculator provides an estimate for illustrative purposes only and assumes an average annual home value increase of 4%. Actual results may vary. Please schedule an appointment with one of our mortgage professionals for a personalized and accurate estimate
Benefits of a Reverse Mortgage in Canada
√ Access up to 55% of your home’s appraised value
√ Receive tax-free cash
√ Employment income is not required to qualify
√ No required monthly mortgage payments while you continue to live in your home and meet the mortgage obligations
√ Use the funds however you choose
√ Stay in your home and maintain ownership
√ Reverse mortgage funds are tax-free and generally do not affect OAS, GIS or CPP benefits
√ You remain on title and continue to own your home
√ Any remaining equity belongs to you or your estate when the reverse mortgage is repaid
√ No Negative Equity Guarantee protection means you or your estate will not owe more than the value of your home, provided the mortgage conditions are met
√ Potential tax benefits when investing: If reverse mortgage funds are used for eligible income-producing investments, the interest may be tax-deductible. Speak with a qualified tax professional to determine whether you qualify.
How Does the Reverse Mortgage in Canada Work?
With a reverse mortgage in Canada, you continue to own your home while accessing a portion of the equity you have built. Depending on the mortgage product, funds may be received as a lump sum, through scheduled payments, or through additional advances over time.
Here is a simple example. Assume your home is worth $1,000,000 and you have a $500,000 reverse mortgage with an interest rate of 5%. If your home increases in value by 4% over the year, it would increase in value by approximately $40,000. During the same year, approximately $25,000 of interest would accrue on the reverse mortgage.
In this example, even though you made no regular mortgage payments, your home equity would increase by approximately $15,000 over the year.
Over time, interest is added to the reverse mortgage balance while the value of your home may also increase or decrease. The amount of equity remaining in your home will depend on several factors, including changes in property value, the interest rate, additional funds borrowed, fees, and how long you have the reverse mortgage.
Reverse mortgage lenders also offer No Negative Equity Guarantee protection. This means that, provided the terms and conditions of the mortgage are met, the amount required to repay the mortgage will not exceed the fair market value of the home when the loan becomes due.
This example is for illustrative purposes only. Home values are not guaranteed to increase, interest rates may change, and actual results will vary.
Why a Reverse Mortgage may a good option.
One of the most attractive features of a reverse mortgage is that there are no required regular mortgage payments while you continue to live in your home and meet the mortgage obligations. This can provide greater financial flexibility and allow you to use your money for the things that matter most to you.
Best of all, the funds you receive from a reverse mortgage are generally tax-free.
Reverse Mortgages Misinformation
There is a lot of misinformation about reverse mortgages online. One reason is that people often search for “reverse mortgage” or “mortgages for seniors” without specifying Canada. Reverse mortgages in Canada are very different from similar products offered in other countries, so it is important to make sure the information you are reading applies specifically to Canadian homeowners.
Canadian reverse mortgages are offered through regulated financial institutions and are subject to Canadian consumer protection requirements. The specific protections available will depend on the lender and the terms of the mortgage.
With a Canadian reverse mortgage, you continue to own your home and remain on title. You are not required to make regular monthly mortgage payments, and you can continue living in your home provided you meet the terms and conditions of your mortgage, such as keeping property taxes and home insurance current and properly maintaining the property.
Canadian reverse mortgage lenders also offer No Negative Equity Guarantee protection. This means that, provided you meet your mortgage obligations, the amount owing will not exceed the fair market value of your home when the mortgage becomes due.
When researching reverse mortgages online, always make sure you are reading information specifically about reverse mortgages in Canada.
Things to Consider with a Reverse Mortgage
✓ You and your spouse (if applicable) must generally be at least 55 years old.
✓ The amount you may qualify for depends on factors such as your age, the value of your home, its location, and the amount of equity available.
✓ The value of your home is confirmed through an independent appraisal.
✓ Depending on the reverse mortgage program, you may be able to take a smaller amount initially and access additional approved funds later as needed.
✓ Interest only accrues on the funds that have actually been advanced to you—not on the full amount you may be approved to borrow.
Reverse Mortgages FAQs
Can You Repay a Reverse Mortgage?
With a reverse mortgage, you don’t make regular payments like a traditional mortgage. Instead, you can pay the loan and interest in a lump sum whenever you choose. However, some lenders may charge a fee if you pay it off early.
You must fully repay your reverse mortgage in these situations:
✔ Selling your home
✔ Moving out permanently
✔ The last borrower passes away
✔ Defaulting on the loan (not following the mortgage terms)
Understanding these rules can help you plan ahead and avoid surprises
How much money can I get?
You can borrow up to 55% of your home’s value, depending on your age and property details. A lender will assess how much you qualify for.
Do I Have to Make Monthly Payments?
Can I get a reverse mortgage if I already have a mortgage?
How do I apply for a reverse mortgage?
Is It Possible to Default on a Reverse Mortgage?
If you have a reverse mortgage, certain situations can put you in default, meaning you could be required to repay the loan sooner. These include:
- Using the loan money for anything illegal
- Giving false information on your application
- Not taking care of your home, causing its value to drop
- Not following the rules in your mortgage contract
It’s important to ask your lender what could count as a default before you apply. When the borrower passes away, most lenders require the loan to be repaid from the estate unless another person on the title is still alive. The time to repay the loan after the last borrower’s death is stated in your contract. Most lenders allow 180 days for repayment, but if the homeowner moves into long-term care, this period may be extended to one year. Knowing these details can help you and your family plan ahead.
Do I still own my home with a reverse mortgage?
Yes! You keep ownership of your home, as long as you follow the loan terms (e.g., maintaining the home and paying property taxes).
What happens if my home’s value drops?
Reverse mortgages in Canada come with a “No Negative Equity Guarantee”, meaning your estate will never owe more than your home’s value when sold.
Can I sell my home if I have a reverse mortgage?
How is the reverse mortgage repaid?