A reverse mortgage is one of the most misunderstood financial products in Canada. Mostly because it's usually explained by people who are selling one. This page explains it the same way I'd explain it to a friend over coffee.
A reverse mortgage is a loan secured against your home. You borrow against the equity you've built — and you don't make monthly payments. The balance grows over time, compounding semi-annually as required by Canada's Interest Act. When you sell the home, permanently move out, or pass away, the balance is repaid from the sale. Any equity remaining after repayment belongs to you or your estate.
You keep the home. You keep the title. You keep full control of the property. The lender cannot force a sale while you maintain the property, pay your property taxes, and keep your home insurance current.
In Canada, four lenders offer reverse mortgage products. The product is well-regulated, genuinely useful for the right borrower, and frequently misunderstood — sometimes by the people selling it.
Most files close in four to six weeks. A well-prepared file can close in approximately 21 days.
The eligibility requirements for a Canadian reverse mortgage are simpler than almost any other mortgage product. Three things: you must be at least 55 years old, you must own the home, and it must be your primary residence — the home you actually live in. That's the complete list. Income, employment, and credit score do not affect eligibility or the approved amount.
The lender orders a formal appraisal from a licensed appraiser to determine the current market value of your home. This is not the municipal assessment — which is often significantly different from market value. This is not an online estimate. It's a proper licensed appraisal. The cost is typically $300–$500 and is deductible from proceeds at closing.
Canada has four reverse mortgage lenders, and they are not all the same. They differ in renewal rate structure, draw flexibility, property acceptance criteria, and long-term cost. Those differences can amount to tens of thousands of dollars over the life of the mortgage. As an independent broker, I compare all four side by side and make a specific recommendation — with the full reasoning in writing.
Once you've seen the lender comparison, you decide. Lump sum up front. Monthly deposits into your account — a predictable income supplement. Draw as needed from an approved amount. Or any combination. You also choose which lender and which rate term suits your timeline. The decision is yours, and there's no obligation to proceed at any point.
Every Canadian reverse mortgage lender requires all borrowers to obtain Independent Legal Advice from their own lawyer — not the broker's, not the lender's. Your lawyer reviews the full mortgage documents with you privately, explains your rights and obligations, and confirms you understand what you're signing. ILA costs $350–$750 and is deducted from the proceeds at closing. It is a consumer protection requirement — not a formality. Use the appointment fully.
The mortgage is registered on title and the funds are advanced according to the structure you chose. No monthly payment is required from this point forward. The balance grows semi-annually — as required by Canadian law — and is repaid when the triggering event occurs: sale, permanent move-out, or passing. Any equity remaining after repayment belongs to you or your estate.
There are no restrictions on how reverse mortgage proceeds are used. Common uses include:
The funds arrive as tax-free cash. They do not appear on your tax return and do not affect your OAS, GIS, or CPP.
Every situation is different. Book a free 30-minute call and I'll run a full lender comparison for your specific property, age, and draw needs.