For many Canadian homeowners approaching or already enjoying retirement, the question is no longer just “Can I retire?” — but “How do I make the most of the home I’ve worked so hard for?”

If your home has appreciated in value over the years, you likely have hundreds of thousands of dollars in equity — and there are two common ways to tap into it: sell your home or apply for a reverse mortgage.

So, which is the better option?

Let’s walk through the key considerations, weigh the pros and cons, and help you decide which path makes the most sense for your retirement goals.

Option 1: Selling Your Home

Selling your home is the traditional way to access its equity. This typically means downsizing — selling your current home and moving into a smaller property, condo, or rental unit. You then use the profits from the sale as part of your retirement income.

Pros of Selling Your Home:

• Full Access to Equity: You unlock the entire value of your home once it’s sold.

• No Future Mortgage Interest: You won’t accumulate loan interest like you would with a reverse mortgage.

• Opportunity to Downsize: A smaller property may mean lower maintenance costs and utilities.

• Potential for Investment: You can reinvest the proceeds from the sale or use them to supplement retirement income.

Cons of Selling Your Home:

• Emotional Toll: Letting go of a long-time home filled with memories can be hard.

• Moving Costs: Realtor fees, legal fees, repairs, staging, and moving costs can add up.

• Disruption to Lifestyle: You may have to leave your community, find new healthcare providers, and adjust to a new space.

• Market Uncertainty: Timing the sale of a home can be tricky — especially during slower markets.

Option 2: Reverse Mortgage

A reverse mortgage allows homeowners 55 and older to access a portion of their home’s equity without selling or moving. You remain in your home and receive tax-free cash, either as a lump sum, monthly deposits, or a line of credit. The loan is repaid only when you sell your home, move out, or pass away.

Pros of a Reverse Mortgage:

• Stay in the Home You Love: No need to downsize, relocate, or part with sentimental space.

• Tax-Free Income: Funds are not considered taxable income and won’t impact Old Age Security or CPP benefits.

• No Monthly Payments: You don’t need to make monthly repayments — the loan is repaid later.

• Flexible Payout Options: Choose lump sum, regular monthly amounts, or a line of credit.

• Regulated & Safe: Federally regulated providers like HomeEquity Bank offer full legal protections and a No Negative Equity Guarantee.

Cons of a Reverse Mortgage:

• Interest Accrues: Because you’re not paying monthly, interest compounds over time and adds to the loan balance.

• Reduced Estate Value: The loan balance is repaid from the sale of your home, which may reduce what’s left for heirs.

• Setup Costs: There are closing costs, legal fees, and appraisal fees (though usually lower than selling and moving).

A Side-by-Side Comparison