Reverse mortgages, explained plainly
Stay In The Home. Draw On The Equity.
For Toronto and GTA homeowners 55 and over: how a reverse mortgage works, what it costs over time, and when a HELOC, a refinance, or downsizing is the better answer.
At a glance
Three Facts Before Anything Else.
A loan against the home you already own, with the bill deferred until you leave it.
55+
Minimum age
Available to Canadian homeowners 55 and over. You borrow against the equity in your home and keep title.
55%
Typical maximum advance
Up to roughly 55% of the home's value at major providers, depending on age, location, and property type.
$0
Regular payments required
Interest accrues and is added to the balance. The loan is repaid when the home is sold, the last borrower moves out permanently, or passes away.
Scroll to walk through it.
01 · Who Qualifies
Fifty-Five Is The Threshold.
A reverse mortgage is available to Canadian homeowners 55 and over. You borrow against the equity in your home, keep title, and make no regular payments. The age is the rule; the dollar figures that follow are illustrative.
55
minimum age
Canadian homeowners, 55 and over
02 · How Much
Up To Roughly Half The Home.
Major providers, HomeEquity Bank's CHIP and Equitable Bank's Flex, lend up to roughly 55% of the home's value. Where you land depends on age, location, and property type. Funds arrive as a lump sum or as scheduled advances.
Illustrative: a $900,000 home with no mortgage owing, so up to $495,000. Your limit depends on age, location, and property type.
03 · The Cost Over Time
No Payments. The Interest Still Runs.
Interest accrues and is added to the balance, so the loan compounds. Illustrative: $300,000 at 7.5% with no payments is $618,309 after 10 years. With the home growing 3% a year, your share of it falls from about 67% to 49%.
Illustrative only. Rates are higher than a conventional mortgage and change over time; home values can fall as well as rise.
04 · Against A HELOC
Two Ways To Draw On Equity.
A HELOC is revolving credit you qualify for on income, with monthly interest payments. A reverse mortgage is qualified on age and equity, with the maximum advance depending on age, location, and property type, with nothing due until the home is sold, the last borrower moves out permanently, or passes away. The higher rate is the price of that.
Reverse mortgage
HELOC
Qualifying
Age 55+ and home equity
Income and credit
Regular payments
None required
Monthly interest, at minimum
Rate
Higher than a conventional mortgage
Conventional lending rate
Repaid
At sale, permanent move-out, or death
Revolving: repay and redraw
Owe more than the home?
No, at major providers, if obligations are met
No equivalent guarantee
05 · The Fit
Who It Suits. Who Should Be Careful.
The trade is simple: no payments now, less equity later. It suits owners who intend to stay and want the payment gone. Anyone likely to move within a few years, or who qualifies for a HELOC or refinance on income, should weigh those first.
Who it suits
Who should be careful
Payments
Wants no monthly payment
Can carry a payment on income
Horizon
Staying in the home long-term
Likely to move within a few years
Estate
Comfortable leaving less to the estate
Wants the home passed on intact
Alternatives
Downsizing is off the table
Open to downsizing, a HELOC, or a refinance
The fit
Right For Some. Wrong For Others.
The trade is no payments now for less equity later. Where you sit on these four points decides whether that trade is worth making.
Who it suits
Payments
Wants no monthly payment
Horizon
Staying in the home long-term
Estate
Comfortable leaving less to the estate
Alternatives
Downsizing is off the table
Who should be careful
Payments
Can carry a payment on income
Horizon
Likely to move within a few years
Estate
Wants the home passed on intact
Alternatives
Open to downsizing, a HELOC, or a refinance
Questions
What Homeowners Ask First.
- Do I still own my home?
- Yes. You keep title. Your obligations are to keep the property maintained, insured, and the property taxes paid.
- When does it have to be repaid?
- When the home is sold, the last borrower moves out permanently, or passes away. There are no regular payments before that; interest accrues and is added to the balance. Early-repayment charges may apply if you pay it off sooner.
- Can I owe more than the home is worth?
- Major providers offer a no-negative-equity guarantee: as long as your obligations are met, the amount owed at repayment will not exceed the fair market value of the home. The balance still grows as interest compounds, so the estate receives less.
- How much can I borrow, and how is it paid out?
- Typically up to roughly 55% of the home's value, depending on age, location, and property type. Funds are received as a loan, either as a lump sum or as scheduled advances. Rates are higher than a conventional mortgage.
Educational content, not advice and not a commitment to lend. Rates and figures are illustrative examples, not quotes — rates change daily and depend on your file. Mortgage services provided by Matthew Im, Mortgage Agent Level 1 (Licence #M24000738), Get A Better Mortgage Inc., FSRA Brokerage Licence #10874. Speak to an accountant about tax questions.
Talk it through
Start With The Whole Picture.
Reverse mortgage, HELOC, refinance, or a sale. I hold both licences, so you get one answer across all four, shopped across 97+ lenders.