Reverse Mortgage: What is it?

A reverse mortgage is a special type of home loan designed for Canadian homeowners aged 55 and older. It allows you to turn a portion of your home equity into tax-free cash, all while staying in your home and without making monthly mortgage payments.

In Ontario, reverse mortgages are regulated by federal lending rules and are offered mainly through HomeEquity Bank (CHIP Reverse Mortgage) and Equitable Bank (EQB Reverse Mortgage).

What Is a Reverse Mortgage?

A reverse mortgage lets you borrow up to 55% of your home’s value without needing to sell, move, or make monthly payments. Instead of paying the lender each month, interest is added to the loan balance over time. The mortgage is repaid only when:

• you sell your home,

• you move out permanently, or

• the last borrower passes away.

You continue to own your home the entire time.

Who Qualifies in Ontario?

To qualify for a reverse mortgage in Canada, you must:

• Be 55 years or older (all applicants)

• Own a home that is your primary residence

• Have significant equity in your home

• Meet the lender’s property and appraisal requirements

These rules come from lender eligibility guidelines and CMHC’s consumer information on reverse mortgages.

How Much Can You Borrow?

In Ontario, most lenders allow up to 55% of your home’s appraised value.The exact amount depends on:

• Your age

• Your home’s value

• Property type and location

• Current interest rates

Generally, older borrowers can access more because the risk to the lender is lower.

When a Reverse Mortgage May Not Be Ideal

You may want to reconsider if:

• You plan to sell or move soon

• You want to preserve maximum inheritance for family

• You have access to lower-cost financing options

• You prefer not to carry debt into retirement

A reverse mortgage is not for everyone, but for many Ontario homeowners aged 55 and older, it can provide financial freedom, stability, and the ability to stay in the home they love. The key is understanding the costs, benefits, and long-term impact on home equity.

Before making any decision, it’s strongly recommended to speak with a financial advisor and obtain independent legal advice—both steps are also required by lenders.

Will you be applying or using, Reverse Mortgage?