What is a reverse mortgage?
A reverse mortgage is a loan against your home equity with no monthly payments. Instead, it’s repaid when you sell the home, move out or pass away. For many homeowners facing rising property taxes, insurance or living costs, it’s a way to access cash while staying in their home.
The trade-off is cost: interest rates and fees are higher than a regular mortgage, and interest builds up over time, which reduces your equity.
Am I eligible?
- Age: You must be 55 or older.
- Your home: It must be your primary residence (you live there more than half the year).
- Existing mortgage: It must be paid off, or paid out as part of the reverse mortgage.
- Equity: The more equity you have, the more you can borrow. Your home’s location and condition matter too.
How you receive the money
- Lump sum: The full amount up front.
- Installments: Part up front and the rest over time.
Any existing loans secured on the home are paid off first. You can use the rest for debts, healthcare costs, repairs and improvements, or everyday living expenses.
Benefits
- Stay in your home while accessing its value.
- Tax-free funds: The money you receive isn’t taxed as income.
- No monthly payments: Repayment happens when the home is sold or on your passing.
- Your benefits are protected: It doesn’t affect Old Age Security or the Guaranteed Income Supplement.
Downsides
- Higher interest rates that add up over time.
- Less to leave your family, since the loan is repaid from your home’s value.
- Costs and fees that reduce what you receive.
- Reduced equity as interest accumulates.
Is a reverse mortgage right for you?
For homeowners with limited income but substantial equity, it can be a lifeline. Because of the costs, it’s often best considered after other options, such as downsizing or a HELOC. I’ll walk you, and your family if you’d like, through every option before you decide.
Reverse mortgage: common questions
Do I still own my home with a reverse mortgage?
Yes. The title stays in your name and you can stay as long as you like. You keep paying your property taxes, insurance and upkeep as you do now. The mortgage is repaid when you sell, move out permanently, or pass away, and you or your estate keep whatever is left.
Will there be equity left in my home for my family?
Yes. A reverse mortgage will never let the loan outweigh the equity in your home. It’s set up so you’ll always have equity left over, even after you’ve become an angel, so your family still inherits a share of your home.
How much can I borrow?
Typically up to around fifty-five percent of your home’s value, depending on your age, the property and where it is. The older you are, the more you can access. You can take it as a lump sum, in instalments, or a mix, and no regular payments are required while you live there.
Can my family be involved?
Yes, and I encourage it. Many of my clients bring their children into the conversation so everyone understands how it works and what it means for the estate. You’ll also get independent legal advice before signing, which is a requirement, not a formality. I’m happy to meet with your family together.
Written by Alex Thomson, independent mortgage professional
