Reverse mortgages
A reverse mortgage lets homeowners 55 and older borrow against their home without a monthly mortgage payment. We explain how it works and compare it with the other ways to use your equity.
- Eligibility and how much you can borrow
- Lump sum or planned advances
- How interest builds over time
- Other ways to use your equity
You stay in your home and on title
There is no required monthly payment, and the loan is repaid when you sell, move out or after the last borrower passes away. Most programs lend up to about 55% of the home's value, depending on your age, the property and where it is.
Interest adds to the balance over time
Because you make no payments, interest is added to the loan and the balance grows. Rates are usually higher than on a regular mortgage. Lenders usually require independent legal advice before you sign.
Answers
All answersHow does a reverse mortgage work in Canada?
You borrow against your home's value and make no required monthly payments. Interest is added to the balance, and the loan is repaid when you sell, move out or after the last borrower passes away. You must be 55 or older.
How much can I get with a reverse mortgage?
Up to about 55% of your home's value, depending on your age, the type of property and where it is. Older borrowers can usually access a larger share.
Can I lose my home with a reverse mortgage?
You keep ownership as long as you live there and meet the terms. You need to keep paying property taxes and home insurance and keep the home in good repair.
What are the downsides of a reverse mortgage?
Rates are higher than on a regular mortgage, and the balance grows over time. That reduces the equity left for you or your estate. There can also be a penalty if you repay early.
Is a reverse mortgage better than a HELOC?
It depends on your income and whether you want monthly payments. A HELOC usually has a lower rate but requires payments and enough income to qualify. A reverse mortgage has no required payments but a higher rate.