Reverse Mortgage
Definition
A reverse mortgage lets homeowners aged 55 and older convert part of their home equity into tax-free cash with no required monthly mortgage payments.
How it works
Instead of paying the lender, interest accumulates and is added to the balance. The loan is repaid when the home is sold, when the last borrower moves out permanently, or from the estate.
Borrowers can usually access up to 55% of the home's value, depending on age, location, and property type. Older applicants qualify for a larger share because the expected repayment horizon is shorter.
Rates are higher than a conventional mortgage and the balance compounds over time, so it works best as a considered long-term decision. Canadian reverse mortgages carry a no-negative-equity guarantee, meaning the repayment never exceeds the home's fair market value when sold.
Quick facts
- Available from age 55; no monthly payments required.
- Access up to roughly 55% of the home's value.
- Protected by a no-negative-equity guarantee.
Put this into practice
Still have questions about reverse mortgage?
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