A reverse mortgage is a loan secured against your home that lets you convert a portion of your home equity into tax-free cash — without selling your home, without making monthly mortgage payments, and without giving up ownership.

The name comes from the way the loan works: instead of you paying the bank each month, the bank pays you (or gives you a lump sum). Interest accumulates on the loan balance over time, and the full amount is repaid only when you sell your home, move out permanently, or pass away.

In Canada, reverse mortgages are available exclusively to homeowners aged 55 and older.

Here is the basic flow:

1. You apply through a licensed reverse mortgage broker or lender.
2. Your home is appraised to determine its current market value.
3. You receive an offer for a loan amount — typically between 20% and 55% of your home's appraised value, depending on your age, property type, and location.
4. You choose how to receive the funds: as a lump sum, in scheduled advances, or a combination of both.
5. No monthly payments are required. Interest is added to your loan balance each month.
6. The loan is repaid when you sell the home, move into long-term care, or your estate settles after you pass away.

To be eligible, you generally need to meet these criteria:

• Age: You (and any co-borrower, such as a spouse) must be at least 55 years old.
• Primary residence: The property must be your principal residence — the home where you live most of the year.
• Property type: Most single-family homes, semi-detached homes, townhouses, and condominiums qualify. Rural properties and mobile homes may have restrictions.
• Equity: You must have sufficient equity in your home. If you have an existing mortgage or home equity line of credit, it must be paid off using the reverse mortgage proceeds (or beforehand).

Your income, credit score, and employment history are not factors in the approval decision. Lenders focus on your age and your home's value.

The maximum loan amount is determined by a formula that considers:

• Your age (and your spouse's age, if applicable) — older borrowers qualify for a higher percentage
• Your home's appraised value
• Your property's location — urban properties in major Canadian cities typically qualify for higher amounts
• The lender's current guidelines

In general, borrowers can access 20% to 55% of their home's value. A 55-year-old couple in a $700,000 home might qualify for $140,000–$200,000. A 75-year-old homeowner in the same home might qualify for $280,000–$350,000.

There are no restrictions on how you use the funds. Common uses include:

• Supplementing retirement income to cover everyday living expenses
• Paying off existing debt — credit cards, a conventional mortgage, or a HELOC
• Home renovations — aging-in-place modifications, accessibility upgrades, or long-overdue repairs
• Helping adult children with a down payment or education costs
• Covering healthcare costs — in-home care, medical equipment, or private nursing
• Travel and lifestyle — enjoying retirement without financial stress

No. Reverse mortgage proceeds are considered loan advances, not income. They are completely tax-free and do not affect your Old Age Security (OAS), Guaranteed Income Supplement (GIS), or other government benefits.

You keep full ownership of your home. The lender registers a mortgage against the title — just like a conventional mortgage — but you remain the registered owner and can continue living there as long as you choose.

You are responsible for:

• Paying property taxes
• Maintaining home insurance
• Keeping the property in reasonable condition

If you fail to meet these obligations, the lender may have the right to call the loan.

The loan becomes due when:

• You sell the home
• You (and your spouse, if applicable) permanently move out — for example, into a long-term care facility
• The last borrower passes away

At that point, the loan balance (principal plus accumulated interest) is repaid from the sale proceeds. Any remaining equity belongs to you or your estate.

Canadian reverse mortgage lenders guarantee that you will never owe more than the fair market value of your home at the time of repayment — this is known as the no-negative-equity guarantee.

A reverse mortgage is one tool among several. It tends to be a strong fit when:

• You want to stay in your home long-term
• You need tax-free cash without monthly payments
• You have significant home equity but limited liquid savings
• Downsizing is not appealing or practical

It may be less suitable if you plan to sell your home in the near future, or if leaving maximum equity to your heirs is a top priority.

The best way to find out is to speak with a licensed reverse mortgage specialist who can walk through your specific numbers — no pressure, no obligation.

Ready to explore your options? Request a free conversation with our team today.