Basic eligibility
Reverse mortgages in Canada are generally available to homeowners aged 55 or older. All registered owners usually need to meet the minimum age, and the home must typically be your primary residence. Lenders also consider property type and location.
How available equity is determined
The amount available is a portion of your home's appraised value. Lenders typically consider:
- The age of the youngest borrower
- The home's appraised value, type and location
- Existing mortgages or secured debts, which usually must be paid off first
- The lender's own criteria
Only a lender can confirm an actual amount.
How interest accumulates and compounds
Because you generally don't make regular payments, interest is added to your balance. Over time, interest is charged on previously added interest — this is compounding. The amount owing can grow significantly over many years, reducing the equity remaining in your home.
Payment requirements
Qualifying homeowners generally aren't required to make regular mortgage payments. Some products allow optional payments, which may slow the growth of your balance. Check the terms and any limits.
Fees and closing costs
Expect costs such as a home appraisal, independent legal advice, and set-up or closing fees. Interest rates on reverse mortgages are often higher than conventional mortgage rates. Prepayment penalties may apply if you repay early.
When repayment becomes due
Repayment is typically due when you sell the home, move out permanently, or the last borrower passes away. It may also become due if the terms of the agreement aren't met.
Your responsibilities as a homeowner
- Pay property taxes on time
- Maintain adequate home insurance
- Keep the home in good repair
- Continue living in the home as your primary residence
Potential protections and their contractual limitations
Some lenders offer features intended to protect borrowers — for example, provisions concerning the amount owed relative to the home's value. These protections are defined by the specific lender and contract, and they carry conditions. Read your agreement and obtain independent legal advice.
Wondering whether it suits you? Read our suitability guide.