Reverse Mortgages
Reverse Mortgages in Ontario
Using your home equity in retirement.
For Canadian homeowners 55 and older. Turn the equity you have built into tax-free cash, with no monthly payments and the right to stay in the home you love.
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A reverse mortgage lets homeowners aged 55 and older borrow against the equity in their home without making regular monthly payments. The funds are tax-free, you keep ownership of your home, and the loan is repaid later, usually when the home is sold. For many retirees it is a way to improve cash flow while staying put.
Who Qualifies
Age 55 or older
Every person on the home's title must be at least 55.
Your primary residence
The home must be where you live, typically at least six months of the year.
Existing debt cleared first
Any mortgage or loan secured against the home is paid off using the reverse mortgage funds.
Up to about 55% of value
You can generally borrow up to 55% of the home's appraised value, based on your age, property, and location.
The Benefits
No monthly payments
You are not required to make any regular principal or interest payments. The interest accrues and is added to the balance.
Tax-free cash
Because the money is a loan and not income, the funds you receive are completely tax-free.
Protects OAS and GIS
The funds are not taxable income, so they will not trigger clawbacks on income-tested benefits.
You keep your home
You stay on title and retain full ownership, and you continue living in your home.
Flexible payouts
Take the funds as a single lump sum, scheduled regular advances, or an undrawn reserve you draw on as needed.
No Negative Equity Guarantee
Meet your obligations and your estate will never owe more than the home's fair market value at sale.
Federally regulated reverse mortgages in Canada include a guarantee that, as long as you meet your obligations such as paying property taxes and maintaining the home, you or your estate will never owe more than the fair market value of the home when it is sold. Your family will not inherit a debt.
Pros and Cons
Costs and Rates
Interest rates. Reverse mortgage rates are generally higher than a traditional mortgage or a HELOC.
Setup or administrative fee. Typically in the range of $995 to $1,795.
Appraisal. A home appraisal sets the loan amount, typically $300 to $600.
Independent Legal Advice (ILA). Required by law from a third-party lawyer, typically $500 to $700.
Title insurance. A one-time closing fee.
Prepayment penalties. Apply if you repay early, often within the first 3 to 10 years, and decrease the longer you hold the loan.
All-in setup. Closing costs often total roughly $1,995 to $3,995 depending on the lender and your closing options.
Fees and rates vary by lender and change over time. We confirm the exact numbers for your situation before you decide.
Reverse Mortgage vs HELOC
| Feature | Reverse Mortgage | HELOC |
|---|---|---|
| Minimum age | 55 or older | No age minimum |
| Income / credit check | Not required | Required to qualify |
| Monthly payments | None | At least monthly interest |
| Borrowing limit | Up to about 55% of value | Up to about 80% of value |
| Interest rate | Generally higher | Generally lower |
| Re-borrowing | Set advances | Revolving, reusable |
Old Age Security can be clawed back once your taxable income passes the annual threshold. Because reverse mortgage funds are loan proceeds and not income, drawing on them instead of taking larger taxable withdrawals from registered accounts like a RRIF can help keep your taxable income below that threshold, while your registered investments keep growing. We can model this with you.
When the Loan Is Repaid
A reverse mortgage has no set maturity date and no monthly payments. The full balance, principal plus accumulated interest, becomes due on a trigger event:
You sell or transfer the home. The loan is repaid from the sale proceeds.
You move out permanently. For example, moving into a long-term care facility.
The last borrower passes away. The balance becomes due and is usually settled from the estate.
You default on the terms. Such as not paying property taxes, not maintaining the home, or misusing the funds.
What Happens to the Home
Selling the home
The estate or family usually sells the home and pays off the balance from the proceeds. Any equity left after the loan and selling costs goes to the heirs.
Keeping the home
The family is never forced to sell. They can keep the home by paying off the balance with savings, life insurance, or a new mortgage in their own name.
No debt inherited
Thanks to the No Negative Equity Guarantee, if the home sells for less than the balance, the estate is not responsible for the difference, provided taxes were paid and the home maintained.
Alternatives to weigh
A HELOC, downsizing to a smaller home, or a traditional refinance may suit you better. We walk through all of them so the choice is yours.
How We Help
A reverse mortgage is a significant decision, so our job is to make it an informed one. We explain how the product works in plain language, compare it honestly against a HELOC, downsizing, and refinancing, run the numbers for your situation, and make sure you receive the Independent Legal Advice the law requires. If a reverse mortgage is right for you, we find the product that fits. If it is not, we will tell you.
Common questions
Reverse mortgage questions
What is a reverse mortgage?
A loan that lets Canadian homeowners aged 55 and older borrow against the equity in their principal residence without making regular monthly payments. The interest accrues onto the balance instead, and the whole thing is settled when the home is sold.
What is the minimum age for a reverse mortgage in Canada?
Both homeowners on title must be at least 55. There is no upper limit, and in general the older you are, the more of your equity you can access.
How much can I borrow with a reverse mortgage?
Typically up to 55 percent of the appraised value. The exact figure depends on your age, the value and location of the home, and the lender. It is worth getting the number before you build a plan around it, because the range between a 55 year old and a 75 year old is wide.
Are reverse mortgage proceeds taxable?
No. The money you receive is a loan, not income, so it is not taxable. Because it never lands on your taxable income, it also does not trigger clawbacks on income-tested benefits such as Old Age Security or the Guaranteed Income Supplement. For a lot of people that second point matters more than the first.
Will my family inherit debt if the home value drops?
No. Federally regulated lenders in Canada include a no negative equity guarantee, which means you or your estate will never owe more than the fair market value of the home at the time of sale, provided the home has been maintained and the property taxes paid.
Can I lose my home?
You keep ownership and cannot be forced out simply because the balance grows. What you do have to keep doing is paying the property taxes, keeping the home insured, and keeping it in reasonable repair. Those are the conditions, and failing them is what puts a file into default.
What happens when the homeowner passes away or moves out?
The balance, principal and accrued interest together, becomes due when you sell, move out permanently, or pass away. Usually the estate sells the home and settles the loan from the proceeds, with whatever equity is left going to the heirs.
The family can also keep the home by paying the balance from other funds. That option surprises people, and it is worth knowing about before it is needed.
How does a reverse mortgage differ from a Home Equity Line of Credit?
They solve different problems. A line of credit needs you to qualify on income and credit, and needs a payment every month, but the rate is lower. A reverse mortgage asks for no income qualification and no monthly payment, but the rate is higher and the interest compounds onto the balance rather than being paid off as you go.
Which one fits comes down to cash flow. If the monthly payment is the problem, the line of credit is not the answer no matter how good the rate looks.
Let’s start with a conversation.
Thirty minutes. No pressure. No rate-shopping. We listen, we ask questions, and we tell you whether the mortgage you are thinking about is actually a win for your future.
Typical 24h-48h turnaround time for a fully underwritten pre-approval.
Who you actually work with
We are both Certified Canadian Reverse Mortgage Consultants. This is a decision that deserves the long conversation and a clear look at what it costs over time, not a quick yes.
Kelly Foote
Mortgage Broker · FSRA #M21002713
Certified Divorce Specialist · Certified Canadian Reverse Mortgage Consultant
Niagara born and built, and the systems side of how a file actually gets run.
Lisa Reynolds
Mortgage Broker · FSRA #M15000477
Certified Canadian Reverse Mortgage Consultant
30+ years in the industry, and the lender strategy behind the harder files.
Fusion Mortgage Group is a team of licensed mortgage brokers with BRX Mortgage Inc., Mortgage Brokerage #13463.
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