Reverse Mortgages in Canada: Everything You Need to Know Before You Apply
As Canadian homeowners approach retirement, many find themselves “house rich but cash poor.” A reverse mortgage can change that.
If you’re 55 or older, a reverse mortgage lets you turn the equity in your home into tax-free cash — without having to sell, downsize, or take on monthly payments. In this guide, we’ll walk you through everything you need to know about reverse mortgages in Canada so you can make a confident, informed decision.
What Is a Reverse Mortgage?
A reverse mortgage is a loan that allows homeowners aged 55+ to access up to 55% of their home’s value in tax-free cash. Unlike a traditional mortgage, you don’t make monthly payments. The loan is repaid only when you sell your home, move out, or pass away.
You still own your home, and you can use the money however you choose — from covering medical expenses to enjoying retirement more comfortably.
Who Is Eligible?
To qualify for a reverse mortgage in Canada, you must:
Be at least 55 years old
Own your home and use it as your primary residence
Live in an eligible urban or suburban area in Canada
Have sufficient equity in your home
Note: If your home is co-owned, both owners must be at least 55
How Much Can I Borrow?
The amount you can access depends on:
Your age
Your home’s appraised value
Your home’s location
Current interest rates
In general, the older you are, the more you can borrow. Most homeowners are eligible to access between 20% and 55% of their home’s value.
What Are the Benefits?
No Monthly Payments: You don’t repay the loan until the home is sold or you move out.
Stay in Your Home: You retain full ownership and can age in place comfortably.
Tax-Free Cash: Use it for anything — medical care, renovations, travel, or helping family.
Flexible Options: Choose lump sum, monthly payments, or a combination.
Federally Regulated: Providers like HomeEquity Bank (CHIP) are governed by Canadian banking laws.
What Are the Downsides?
Interest Accrues Over Time: Since you’re not making payments, the balance increases over time.
Reduced Estate Value: The amount your heirs inherit may be lower.
Fees Apply: Expect appraisal, legal, and closing fees.
Is It Safe?
Yes! Reverse mortgages in Canada are highly regulated. The CHIP Reverse Mortgage is offered by HomeEquity Bank, a federally regulated Schedule I Canadian bank.
Borrowers are guaranteed to never owe more than the fair market value of the home at the time of repayment (called the “No Negative Equity Guarantee”).
What Is the Process?
Here’s how it works:
Get a free consultation and estimate.
Complete a professional home appraisal.
Finalize your application with legal advice.
Receive your funds (usually within a few weeks).
You continue to own your home and can live in it as long as you like.
When Do I Repay the Loan?
Repayment happens only when you:
Sell your home
Move out permanently
Pass away
The proceeds from the sale are used to repay the loan, and any remaining equity goes to your estate or beneficiaries.
Is a Reverse Mortgage Right for You?
It might be — if you want to supplement your retirement income, avoid selling your home, and stay financially independent without monthly payments. If you’re not ready to downsize or take out a traditional loan, this could be a smart alternative.
Next Steps
Want to know how much you could qualify for? Try our free eligibility calculator or speak with a licensed advisor today.
