The alternative we check first
Would a credit line be cheaper?
Often, yes — and if it is, we'll tell you. A home equity line of credit almost always carries a lower rate than a reverse mortgage. The catch is that it demands a payment every single month and you have to pass a stress test to get one. This tool puts both side by side, including the part most comparisons leave out: what the payment does to your budget.
Step 1: Your home and your situation
A reverse mortgage is for homeowners usually 55 or older. A credit line has no age rule — it tests your income instead.
A reverse mortgage generally requires your current mortgage to be paid off and closed, so it comes out of the money raised either way.
On top of clearing the mortgage above.
Step 2: The credit line
Most credit lines are variable, set at your lender's prime rate plus a margin.
Interest only keeps the balance flat forever. Paying it down clears the debt but costs more each month.
A credit line at a bank requires a stress test — you must show you could afford payments at a higher rate than you're charged. Confirm the exact rate with the lender; this is an assumption.
Used only to show what share of your income the required payment takes.
Step 3: The reverse mortgage and the horizon
A reverse mortgage rate is usually higher than a mortgage or a credit line — that is the price of never having to make a payment.
How long you expect to stay in the home. Short stays favour the cheaper option; long stays favour the one with no payments.
Our read on it
The credit line leaves your family more — if you can carry the payment.
Over 15 years, the credit line ends with $330,210 more home equity than the reverse mortgage. But it demands $921 every month from your budget — 15.4% of your income — where the reverse mortgage demands nothing. That is the whole trade, and only you can say whether the payment is comfortable.
Reverse mortgage
Credit line (HELOC)
Can the budget actually carry it?
This is where most reverse-mortgage clients land. A credit line at a bank requires a stress test — you have to prove you could afford the payment at a higher rate than you're actually charged.
A reverse mortgage has no stress test and no income test — approval rests on age, the home and its location. That is precisely who it exists for: someone with plenty of equity and not enough provable income to satisfy a bank.
Home equity left, year by year
Both lines are what your family would be left with. The credit line stays higher only because you are feeding it every month.
Estimates, not guarantees. The ceilings used here are the regulator's published maximums — a reverse mortgage usually up to 55% of the home's value, a credit line up to 65% (Financial Consumer Agency of Canada). Your actual limit depends on age, property, location and lender, and is always lower than the ceiling. Credit-line rates are usually variable and will move. The stress-test rate above is an assumption you can change — confirm it with the lender. Note too that you generally cannot hold both products at once: a reverse mortgage may require any existing credit line secured by the home to be paid off and closed.
The borrowing ceilings here come from the Financial Consumer Agency of Canada, checked on August 4, 2026: a reverse mortgage lets you "borrow up to 55% of the current value of your home"; a credit line "up to 65% of the value of your home"; and total borrowing against home equity is usually capped at 80%. FCAC also confirms a reverse mortgage rate "is usually higher than the interest rate for a mortgage [or] home equity line of credit", that a credit line requires a stress test, and that a reverse mortgage may require any existing mortgage or credit line secured by the home to be paid off and closed. The arithmetic was re-derived independently and checked against hand-computed cases; the reverse side is asserted to match our projection calculator to the cent.
Reverse mortgage vs. credit line glossary
- HELOC (home equity line of credit)
- A revolving credit line secured against your home — borrow, repay, borrow again, up to a limit of 65% of the home's value. Interest is charged only on what you actually owe, and a payment is required every month. Most are variable-rate, set at the lender's prime rate plus a margin.
- Stress test
- To get a credit line at a bank you must prove you could afford the payments at a qualifying interest rate higher than the one you're charged. A reverse mortgage has no stress test and no income test — approval rests on your age, the home, and its location.
- Interest-only payment
- Paying just the month's interest, so the balance never moves. It is the cheapest way to hold a credit line, and it is why a credit line can leave more equity than a reverse mortgage — you are paying, every month, the interest that would otherwise compound.
- Compounding
- On a reverse mortgage the unpaid interest is added to the balance, and next period's interest is charged on that larger balance. That is the cost of never making a payment — and the reason the two lines on the chart separate over time.
- No-negative-equity guarantee
- A guarantee (carried by both CHIP and Equitable's Reverse Mortgage Flex) that you or your estate will never owe more than the home's fair market value at the time of sale. A credit line carries no such protection — the debt is yours in full.
Want us to price both, properly, on your file?
These are illustrations. Tell us your numbers and we'll bring back real quotes on both a reverse mortgage and a credit line, with our honest recommendation in writing — including when the answer is neither.
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