The Reverse Mortgage

Reverse mortgages allow eligible Canadians aged 55 and older to access up to 55% of the equity in their property, depending on age. Funds can be taken as a lump sum, as monthly or quarterly instalments, or as a combination of both – and it’s tax-free. This flexibility helps smooth income in retirement – especially when traditional pension and investment income is fully taxable – and may not be enough.

A hallmark feature of reverse mortgages is that no payments are required. The loan is repaid only when the homeowner sells, moves out, or passes away. Until then, interest simply accrues onto the balance. Borrowers remain responsible for insurance and property taxes (note: property taxes can already be deferred in BC starting at age 55).

Although reverse mortgages originated in the U.S. nearly 40 years ago, early products there suffered from poor regulation – predatory lending, excessive loan-to-value ratios, and situations where ownership transferred into the lender’s name. That reputation spread internationally, but it does not reflect the modern Canadian version.

In Canada, reverse mortgages are tightly regulated: lower maximum loan amounts, mandatory independent legal advice for the homeowner, and title to the property always remaining solely in the homeowner’s name.

Unlike traditional mortgages – which depend heavily on income and credit – reverse mortgages are approved primarily on age and available home equity. As a result, they serve a crucial demographic: seniors who want financial flexibility, improved cash flow, or strategic tax and estate-planning options without selling or leaving their home.

Canada currently has four federally regulated reverse-mortgage lenders, and I’m approved with all of them. Here’s some general information from the Financial Consumer Agency of Canada.

If you, your family, or your advisors would like to explore whether a reverse mortgage makes sense, I’m always happy to discuss the details.