Reverse mortgages in Canada, fully explained

FCAC’s definition: “a type of loan for homeowners, usually aged 55 or older… It allows you to borrow money from your home equity without selling your home,” converting equity into tax-free cash. You can usually access up to 55% of the home’s value (Equitable advertises up to 59% at its top tier), with the actual amount set by your age, the home’s appraised value, type and location — older borrowers qualify for more, because the lender expects to wait less time to be repaid. No payments are required: interest compounds onto the balance until you sell, move out, or the last borrower dies.

As of our June 11, 2026 verification at the lenders’ own rate sheets: 5-year fixed reverse-mortgage rates run 6.44%–6.64% (Equitable Flex Lite and Home Trust at 6.44%, CHIP at 6.64%; APRs ~6.5%–7.1%), plus set-up costs of $995 (Equitable, Home Trust) to $1,795 (CHIP), appraisal and independent-legal-advice fees. For context the same week: posted HELOCs ran 5.45%–5.95% and a discounted 5-year fixed mortgage ~4.84% — so the reverse-mortgage premium is real but currently about a point over a HELOC, narrower than older articles claim. The bigger cost is structural: with no payments, the balance compounds.

No — and this is a genuine advantage FCAC states plainly: “This money doesn’t affect the Old Age Security (OAS) or Guaranteed Income Supplement (GIS) benefits you may be getting.” Reverse-mortgage advances are loan proceeds, not income — tax-free and invisible to income-tested benefits. For a GIS-receiving senior, that property is unique: RRIF withdrawals and most other income sources reduce GIS; equity release doesn’t. (It also means the borrowing leaves no room for the OAS clawback to grab.)

Not under the guarantees — read with their fine print. HomeEquity Bank: “as long as the mortgage obligations are met, the amount you will have to repay on the due date will not exceed the fair market value of your home,” with the bank absorbing any shortfall; Equitable’s wording matches. The two qualifiers that matter: the obligations (maintain the property, keep taxes and insurance paid — default voids the protection) and the exclusions (both lenders exclude fees and interest accrued after the due date). Meet the terms and the downside genuinely stops at the house.

The loan comes due. The triggers, in the lenders’ and FCAC’s own lists: selling, moving out (Equitable specifies a move into long-term care), the last borrower’s death, or default. The estate planning point FCAC flags deserves bold type: “The time needed to settle an estate may be longer than the time allowed to repay a reverse mortgage” — heirs typically must repay (usually by selling the home) on the lender’s clock, not probate’s. If leaving the house itself to family is a priority, this product works against it; if leaving value minus what you chose to spend is acceptable, it works as designed.

The honest fit is narrow but real: house-rich, income-light, staying put — often someone who can’t pass the income-based HELOC stress test, wants no monthly payments, and values aging in place above maximizing the estate. The poor fits: anyone who could qualify for a HELOC (cheaper) or could rationally downsize (cheapest of all — FCAC’s own alternatives list starts there), anyone planning to move within a few years (set-up costs amortize badly), and anyone for whom the estate is the point. Several provinces require independent legal advice before signing — treat that as a feature, not a hurdle.