The honest math
Is a reverse mortgage right for you? Sometimes the answer is no.
Canadian retirement has a design flaw: the wealth is in the house and the income is somewhere smaller. A reverse mortgage resolves it without selling the house. It also has a real cost that compounds quietly. Both things are true — so here's both sides, the way we'd explain it at your kitchen table.
The part every ad skips: compounding.
With no payments, the interest is added to the balance, and next year's interest is charged on that bigger balance. As an illustration at a 6.5% reverse rate, a $300,000 advance grows to roughly $413,000 in 5 years, $569,000 in 10 years, and $783,000 in 15 years if you never pay a dollar along the way.
That's not a trick — it's the product working as designed. Your home is usually appreciating at the same time, which is why the honest question isn't "does the balance grow?" (it does) but "what will my estate keep, year by year?" — exactly what our calculator shows.
Two protections soften the edges: payments are optional, not forbidden — most lenders let you pay the interest monthly and keep the balance flat — and the no-negative-equity guarantee means you or your estate can never owe more than the home's fair market value, even if the lines cross.
The alternatives we check first — every file
- A HELOC — a credit line against the home, typically up to 65% of its value. Standard pricing, but it requires monthly payments and full income qualifying with the stress test — exactly what reverse products exist to avoid. If you qualify comfortably, it's usually the cheaper answer, and we'll say so.
- A refinance — up to 80% of the home's value, standard rates, full qualifying and a required payment. More money, more obligation.
- Downsizing — the zero-interest option. It frees the most equity but costs you the home, the neighbourhood, and the move itself. Worth pricing honestly next to the others.
A reverse mortgage earns its place when…
- Income can't comfortably carry a new monthly payment — or you simply refuse to take one on in retirement
- You'd fail a bank's stress test (reverse mortgages have none — approval is age, home, and location)
- You want to stay in this home for years, not sell soon
- The goal is monthly income, clearing an existing mortgage, or helping family now
- You've talked it through with the people the inheritance affects
We'll steer you elsewhere when…
- Your income qualifies for a HELOC and the payment is comfortable — that's usually cheaper, and we'll tell you so
- You plan to sell or move within a couple of years — setup costs don't get time to earn their keep
- The need is small and short-term — smaller tools fit better
- Preserving every dollar of the estate is the top priority — compounding works against that goal
Considering it? Have these ready.
No income documents, no credit anxiety — reverse files are refreshingly short.
- Ages of all title-holders — the advance is age-driven
- Property address and a realistic sense of value — we can order the appraisal
- Current mortgage or HELOC balance, if any (it gets paid out first)
- What the funds are for — lump sum, monthly advances, or both
- Property tax and insurance status — staying current on both is the ongoing obligation
- Family in the loop, if you want them there
Figures on this page are typical ranges for illustration — reviewed July 2026 — and depend on age, property, location, and product. Your exact numbers come from the lender, in writing.
Want our honest read on your situation?
Bring your numbers — or just your questions. We'll model your scenario, compare every alternative, and give you a written recommendation. If the answer is 'don't do this,' that's what we'll write.
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