Reverse Mortgage vs. Home Equity Line of Credit (HELOC): Which Is Better for Seniors?
As Canadian homeowners plan for retirement, many look for ways to access the equity they’ve built in their homes — without selling or downsizing. Two popular options for seniors are the CHIP Reverse Mortgage and a Home Equity Line of Credit (HELOC).
Both allow you to tap into your home’s value, but they work very differently. In this post, we’ll compare CHIP and HELOCs to help you decide which is right for your retirement lifestyle.
What Is a CHIP Reverse Mortgage?
The CHIP Reverse Mortgage is specifically designed for Canadian homeowners aged 55 and older. It allows you to access up to 55% of your home’s value in tax-free funds — with no monthly payments required.
The loan is repaid only when you move out, sell your home, or pass away. You continue to own your home and can stay in it as long as you want.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured against your home. You can borrow and repay funds as needed, and you're only charged interest on the amount you use.
However, unlike a reverse mortgage, a HELOC does require monthly payments on any outstanding balance, and approval is based on your income, credit score, and financial history.
Side-by-Side Comparison
| Feature | CHIP Reverse Mortgage | HELOC |
|---|---|---|
| Age Requirement | 55+ | No age restriction |
| Monthly Payments | None | Required monthly |
| Approval Based On | Home equity and age | Income, credit score |
| Max Loan Amount | Up to 55% of home value | Varies; typically up to 65% |
| Repayment | When you move, sell, or pass away | Monthly, like a traditional loan |
| Ownership | You keep full ownership | You keep full ownership |
| Income Impact | Doesn’t affect Old Age Security or CPP | Could affect benefits if repayments reduce available cash flow |
| Interest Rates | Typically fixed or variable | Variable (can fluctuate) |
Which One Is Better for Seniors?
Choose CHIP if you:
Are 55 or older and prefer no monthly payments
Want predictable access to funds during retirement
May have limited income or don’t qualify for a traditional loan
Want to age in place and improve cash flow without selling
Choose HELOC if you:
Are comfortable making monthly payments
Have a steady income and strong credit history
Prefer to borrow only what you need, when you need it
Are younger than 55 and not eligible for CHIP
What About Risk?
CHIP Reverse Mortgages are federally regulated and include a “No Negative Equity Guarantee,” meaning you’ll never owe more than your home’s fair market value when it’s sold.
With HELOCs, there's more risk if you can’t make payments — the bank could demand repayment or foreclose on your home in extreme cases.
Final Thoughts
The best solution depends on your age, income, financial goals, and comfort with repayment.
At Legacy Unlocked, we help Canadians understand their options clearly and make confident decisions for the future. Whether you’re leaning toward a CHIP Reverse Mortgage or just exploring options, we’re here to help.
Ready to find out what works best for you?
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