Money & Legal
Reverse Mortgages and Home Equity Options
Pros, cons and alternatives to borrowing against your home.
If you want to stay in your home but need more income, you can borrow against the value you’ve built up. There are several ways to do it.
Reverse mortgage
Available in Canada to homeowners aged 55 and older. You borrow part of your home’s value and make no regular payments. The loan plus interest is repaid when you sell, move out, or pass away.
- Advantages: stay in your home, no monthly payments, money is tax-free
- Disadvantages: interest rates are usually higher than a regular mortgage, the debt grows over time, and there is less equity left for you or your estate. There can be penalties if you sell within the first few years.
Home equity line of credit (HELOC)
A line of credit secured by your home, usually at a lower rate. You must qualify on your income and make at least the interest payments each month.
Other options to consider first
- Downsizing and investing the difference
- Renting out a basement suite or room
- Government programs: see Property Tax Relief for Seniors
Involve your family and get independent legal advice before signing any reverse mortgage. Ask for the total cost over 5, 10 and 15 years in writing.
Next guideProperty Tax Relief for Seniors →