By Linden Crain, Mortgage Agent Level 2 – Super Mortgage Team

For many Canadians, their home is their largest asset—and often their most underutilized. A reverse mortgage can be a powerful financial tool for homeowners who want to access the equity in their home without selling or downsizing. But how exactly do reverse mortgages work in Canada, and who should consider them? Let’s break it down.

What is a Reverse Mortgage?

A reverse mortgage is a loan designed for Canadian homeowners aged 55 and older that allows them to borrow up to 55% of their home’s value. Unlike a traditional mortgage, you don’t have to make monthly payments. Instead, the loan (plus interest) is repaid when you sell your home, move out permanently, or pass away.

Key Features of a Reverse Mortgage in Canada

– No monthly payments required – You keep living in your home while deferring repayment.
– Tax-free funds – The money you access is not considered taxable income, which means it won’t affect your Old Age Security (OAS) or Guaranteed Income Supplement (GIS).
– Flexible options – You can receive the funds as a lump sum, regular installments, or a combination of both.
– Maintain homeownership – You remain the legal owner of your property.

Who Can Qualify?

To qualify for a reverse mortgage in Canada, you must:

– Be 55 years or older (both spouses if applicable).
– Own your home and use it as your primary residence.
– Have sufficient home equity.
– Your home’s location, condition, and market value also play a role in how much you can borrow.

Pros and Cons of a Reverse Mortgage

Advantages:

– Provides a steady income stream during retirement.
– No need to sell your home or move.
– Flexible access to tax-free cash.

Considerations:

– Interest accumulates over time, reducing your home equity.
– You may leave less inheritance for your heirs.
– Closing and setup costs may apply.
– Common Uses for Reverse Mortgage Funds
– Many Canadian homeowners use reverse mortgage funds to:
– Supplement retirement income.
– Cover healthcare or in-home care costs.
– Pay off existing debts or mortgages.
– Renovate or maintain their home.
– Help children or grandchildren financially.

Is a Reverse Mortgage Right for You?

A reverse mortgage can be a smart solution for Canadians who are “house rich but cash poor.” If you want to stay in your home, enjoy financial freedom, and reduce stress in retirement, this option may be worth exploring. However, it’s important to review all alternatives, including downsizing, refinancing, or a home equity line of credit (HELOC).

Talk to a Mortgage Professional

Every homeowner’s situation is unique, which is why professional advice matters. At the Super Mortgage Team, we help clients across Canada understand whether a reverse mortgage fits their long-term financial goals.

📞 Contact Linden Crain, Mortgage Agent Level 2, today to discuss your options and see how a reverse mortgage could work for you.