Retire the way you want, right at home
The Plain Facts
What is a Reverse Mortgage?
It's a financial product that allows you to access the equity in your home and convert it into tax-free money.
Reverse mortgages in Canada are unique. They are loans secured by a home's appraised value. The homeowner has the option of making no monthly payments and deferring the payback of the loan to the time when he/she no longer occupies the home.
What are the Two Types of Reverse Mortgages in Canada?
There are two types of reverse mortgages in Canada:
1. Lump Sum Reverse Mortgage: With this type, you can choose to receive your cash as a lump sum (all of it upfront), or as a lump sum with additional advances over time.
2. Equity Pension Reverse Mortgage: This type is like a pension. You can choose to receive your cash in either monthly installments, or in quarterly installments (every 3 months), to suit your needs. You can also start the Equity Pension with a lump sum amount of your choice.
Who Qualifies For A Reverse Mortgage in Canada?
- Homeowners in Canada
- You must be 55 years old (or older)
- Your home must remain your primary residence

“We needed to be able to manage our lives without the family supporting us. The reverse mortgage means having a life.” - Gordon & Aubrey A
Purpose Of Funds (How Can You Use The Cash?)
The short answer: You can use the money however you please.
Some Ways Canadians Are Using Reverse Mortgage Funds: | |
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(1) Day-to-Day Living Expenses | (2) Preserve Investments, Assets, Savings |
(3) Not Have to Move and Stay in Your Home | (4) Debt Consolidation |
(5) Gifts to Family or Loved Ones (Living Legacy) | (6) Medical Costs, Live-In Care, In-Home Care |
(7) Purchase a New Home or Cottage | (8) Making their Cash-Flow Tax Efficient |
(9) Purchase or Rent a Vacation Property / Investment Property to Generate Income | (10) Improve Your Cash Flow |
(11) Renovations / Home Improvements | (12) Funding their Retirement |
(13) Disability Expenditures | (14) Estate Needs: Pay Insurance Premiums |
(15) Early Inheritances | (16) Vacations, Travel |
(17) Hobbies, Personal Projects | (18) Education for Self or Family Members |
What Are The Options To Receive the Tax-Free Cash? Option 1: Lump Sum Reverse Mortgage
- 1In a single lump sum. This means you receive 100% of the funds you are approved for, all at once.
- 2As an initial lump-sum with additional advances over time. This means you receive less than the total amount of funds you are approved for, and set the rest aside, and then draw from them over time, as you please.
The minimum amount of funds for the initial lump sum is $25,000. This is regardless of whether you receive all of your available funds in a lump sum, or an initial lump sum amount with additional advances over time.
The minimum amount of funds for any additional advance is $5000.
What Are The Options To Receive the Tax-Free Cash? Option 2: Equity Pension Reverse Mortgage
- 1In a single lump sum followed by ongoing, monthly income or quarterly (every 3 months) income.
- 2In a single lump sum followed by ongoing, monthly income or quarterly (every 3 months) income, with additional lump-sum advances over time, whenever you please.
The minimum amount of funds for the initial lump sum is $25,000. There is no maximum.
The minimum amount of funds for ongoing, monthly income is $1000 per month. There is no maximum.
The minimum amount of funds for ongoing, quarterly income is $3000 per quarter (every three months). There is no maximum.
The minimum amount of funds for any additional lump-sum advances is $5000.
How Can There Be No Monthly Payments Required?
Reverse mortgages in Canada are designed for people aged 55+, who are usually on fixed incomes (regardless of the amount of monthly income). Because of this, there are no required monthly payments.
Who Will Own My Home?
You will. You maintain full title and ownership of your home.
You are in charge. You have control. You maintain ownership of your home. The bank (lender) will not own your home.
- Your responsibilities: Your home must remain your primary residence. Simply keep your property well maintained, and pay your home insurance and property taxes. That's all you have to do.
Guaranteed by reverse mortgage lenders in Canada: unlike other mortgages, with a reverse mortgage in Canada you will never be asked to leave your home as long as you fulfil your responsibilities. Reverse mortgages in Canada are not demand loans, which means the bank (lender) can not demand payment, cancel the loan, or force you to re-qualify as long as you live in the home, keep the property taxes and home insurance up to date, and maintain the home in proper condition.
Are Reverse Mortgages Safe?
Unlike in the USA, in Canada reverse mortgages are very conservative and designed to protect both the homeowner and the equity in the home. This makes them very safe. In Canada only the most highly-regulated banks (called "Schedule 1 Banks") provide reverse mortgages. These banks are federally-regulated, under the scrutiny of OSFI, the Office of the Superintendent of Financial Institutions. Reverse mortgage lenders in Canada are under the same regulations as Canada's "Big Six" banks, which are RBC, Bank of Montreal, CIBC, TD, Scotiabank, and National Bank of Canada. Some additional features of reverse mortgage lenders in Canada are below. Reverse mortgages in Canada are based on conservative lending practices. This mean that the lenders will never allow more than 55% of the home’s equity to be borrowed. Lenders guarantee fair-market value if the reverse mortgage value exceeds the property value. If the property decreases to a point where it is below the mortgage value, the lender will absorb the shortfall.




How Much Money Can I Receive?
You can convert up to 55% of your home's value into tax-free cash. 55% is the maximum amount a homeowner can qualify for. How much you qualify for depends primarily on three things: (1) your age, (2) your property, and (3) your property's location. For example:
Your Home's Value | Max. Equity Conversion | Max. Cash Amount |
---|---|---|
$500,000 | 55% | $275,000 |
$750,000 | 55% | $412,500 |
$1,000,000 | 55% | $550,000 |
$1,500,000 | 55% | $825,000 |
$3,000,000 | 55% | $1,650,000 |
Find Out How Much Your Home Will Qualify For
For an exact number, click the button below to answer three quick questions and we'll give you an exact number within 1 to 12 hours. Or call 1-888-228-0082.
What About Repayment Of The Loan?
A reverse mortgage can be paid back at any time. Repayment usually occurs when homeowners sell or move. Since over 90% of Canadians 60+ want to remain in their homes as long as possible, most reverse mortgages are paid back when the homeowners have passed away.
Repayment is only required when the homeowners choose to move, or to sell the home. Usually the home is sold and the money from the sale is used to pay back the reverse mortgage, and then the remaining cash is paid to the homeowners or to their Estate. If the homeowners pass away, for example, and the inheriting parties choose to keep the home, then they can pay back the reverse mortgage by using/obtaining financing of their choice.
You always have the option to make advance interest payments in case you wish to reduce the amount owing at the end of the reverse mortgage.
When Does The Loan End?
That's up to you. As long as your home remains your primary residence, and you keep your property well-maintained, and you pay your home insurance and property taxes, the loan can last as long as you want. If one of the homeowners (for example, a spouse) passes away, the other homeowner can continue living in the home as long as he or she wishes, as long as these simple conditions are met.
What Happens If My Home Decreases in Value?
Nothing changes with your reverse mortgage. You will continue to have peace of mind. The loan amount can't be demanded by the bank because the property decreases in value.
Guaranteed by reverse mortgage lenders in Canada: the loan amount you eventually repay will never exceed the fair market value of your home.
What Happens If My Home Increases in Value?
If your home increases in value, then those gains in value (equity) are all yours. In addition, you'll have the option to refinance the reverse mortgage (if you choose to) and convert the additional equity into more cash.
Will A Reverse Mortgage Wipe Out My Equity?
The homeowner keeps all the equity remaining in the home after the reverse mortgage is paid off. In over 30 years (since 1986, when reverse mortgages were first offered in Canada), over 99% of homeowners have equity left over when their reverse mortgage is repaid. On average, the amount of equity left over is more than 50% of the value of the home.
How much equity you have will depend on three things, (1) how much you borrow, (2) the home's fair market value, and (3) the amount of time that passes from the date the reverse mortgage is first put on your home.
On average, most homes in Canada rise in value every year. These gains in home equity can offset some (or even ALL) of the reverse mortgage amount.
Aren't The Interest Rates High?
The interest rates for reverse mortgages are modestly higher than the interest rates for conventional bank mortgages, but much lower than the interest rates of private mortgages.
Why is this? It's because reverse mortgages are far riskier for the bank than conventional mortgages. Unlike getting a conventional mortgage, qualifying for a reverse mortgage is based strictly on the homeowner's age and property value. There are no required monthly payments. Lastly, reverse mortgages, unlike conventional mortgages, are not demand loans (they are not "callable" loans), which means the lenders can never demand payment, cancel the loan, or force you to re-qualify as long as you live in the home, keep the property taxes and insurance up to date, and maintain the home in proper condition.
To see current rates for reverse mortgages in Canada, click here.
How Can Rising Home Values Offset the Reverse Mortgage Interest Rate ?
If a home rises enough in value, then this rise can offset some (or all) of the amount of reverse mortgage interest accruing against the home. This has not been uncommon in many big Canadian cities, especially in Ontario and British Columbia, where rising home values have outperformed many other investment types.
To see how this works, click here to use your home's value in different scenarios of rising home values and reverse mortgage interest rates.
Will Reverse Mortgage Funds Affect My Government Benefits?
No, they won't. The cash from a reverse mortgage is tax-free income. Any government benefits you receive, such as Canada Pension Plan (CPP), Old Age Security (OAS), or Guaranteed Income Supplement (GIS) will not be affected.
What If I Already Have An Existing Mortgage?
Not a problem. Many Canadians use reverse mortgage funds to pay off existing mortgages and even other debts as well, such as credit card debt, car loans, and so on. Any debts secured by the home (such as existing mortgages, lines of credit, home equity loans, liens, etc.) must be paid off from the reverse mortgage funds. The homeowner gets all the remaining reverse mortgage funds.
Is Downsizing Better Than Getting A Reverse Mortgage?
Most people underestimate how disruptive downsizing really is. There are many expenses; moreover, it usually ends up taking longer and being more complex than expected. Lastly, homeowners underestimate how drastically it changes their lifestyles. Because home prices are currently so high in Canada, downsizing usually means at least two things: (1) moving into a smaller home, and (2) moving to a different neighbourhood, city, or even province. Most Canadians don't want to leave the neighbourhoods they love. Many Canadians downsize in order to free up money for retirement, but the extra cash is often gone sooner than they expect. Expenses often add up with renovations, unexpected costs, commissions paid to real estate brokers, legal fees paid to lawyers, and lastly, land transfer taxes. A reverse mortgage is a much more controllable, predictable way for homeowners to secure safe funds after they reach 55 years of age.
Most Common Alternatives to Reverse Mortgages
(1) Selling the Home or Downsizing | (2) Trying to Take Out a Conventional Mortgage or HELOC (Home Equity Line of Credit) | (3) Taking Out a Home Equity Loan (Private Mortgage) |
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Problem: Undesired In a 2018 survey, over 90% of Canadian retirees did not want to move or downsize. | Problem: Income Requirements These mortgage types have ever-increasing income and employment requirements that exclude many Canadians aged 55+ | Problem: High Fees Erode Equity The fees for arranging a private mortgage range from 1.5 - 4.5%, which diminishes the homeowner's equity. |
Problem: Relocating Because of rising home values, most Canadian retirees who sell must move anywhere from 5 to 200 km away from the neighbourhoods they know and enjoy. | Problem: Credit Requirements Strict credit rules are common for these mortgage types, which usually require a clean credit history and a sizeable "body of credit" for each homeowner. | Problem: Unsustainable Interest Interest rates on private mortgage funds can be as high as 18%/year, which wipes out most of the month's income for people on fixed income. |
Problem: Healthcare Access Downsizing and moving away from city centres increases the distance and accessibility to healthcare facilities that many retirees require readily-available access to. | Problem: Monthly Payments Conventional mortgages and HELOCs require monthly payments, usually on both principal and interest. | Problem: Monthly Payments Private mortgages and home equity loans require monthly payments, usually on both principal and interest. |
Problem: Social Circles Most people aged 55+ want to enjoy spending time with their loved ones and friends and community. Moving away hinders this. | Problem: The Need to Re-Qualify These mortgages carry significant risks of non-renewal by the lender at the end of the mortgage term. | Problem: The Need to Re-Qualify These mortgages carry significant risks of non-renewal by the lender at the end of the mortgage term, which is typically 1 or 2 years. Private mortgage are short-term solutions. |
Problem: Limited Savings Moving usually doesn't free up the amount of funds required to sustain people throughout their retirement. 75% of retirees run out of money in less than 8 years. | Problem: "Demand" Loan These types of mortgages are demand loans, which means the lenders can cancel for any reason and demand payment in full. This puts the homeowners in danger of power of sale, foreclosure, and eviction. | Problem: "Demand" Loan These types of mortgages are demand loans, which means the lenders can cancel for any reason and demand payment in full. This puts the homeowners in danger of power of sale, foreclosure, and eviction. |
Is A Reverse Mortgage A Loan Of Last Resort?
Absolutely not. Financial planners and wealth managers are increasingly recommending reverse mortgages as an important component of a comprehensive, tax-efficient retirement plan. The real loans of last resort are home equity loans and private mortgages - their fees and interest rates are prohibitive to most people on fixed incomes, and as "demand loans" they put the homeowner in danger of foreclosure and eviction. Reverse mortgages, on the other hand, have fair interest rates, come exclusively from Canada's most highly-regulated banks, and will never require the homeowners to leave the home.
What Are The Fees With A Reverse Mortgage?
Lotus Income charges no fees to the homeowner. Lotus Income's services are 100% free to the homeowner. The only upfront expense for the homeowner is the home-appraisal fee, which is paid to the independent home appraiser. This typically costs $250 to $450. The other fees are all paid out of the mortgage funds. The three fees for a reverse mortgage in Canada are: (1) home appraisal fee (a one-time fee paid to the home appraiser, typically $250 to $450), (2) the fee for independent legal advice (a one-time fee paid to the homeowner's lawyer, typically $200 to $1000), and (3) the loan set-up and administration fee (a one-time fee paid directly to the reverse mortgage lender (the bank), which costs $1795. Nothing is paid by the homeowner to Lotus Income. Again, the only fee that the homeowner pays out of pocket is the appraisal fee.

“With a line of credit, I would have to make payments to the bank every month. I didn’t want to do that, I didn’t want this to affect my income.” - Sandra H