If you're a homeowner in British Columbia aged 55 or older, a reverse mortgage could help you access the equity in your home without selling it. It can be a flexible way to supplement retirement income, help your kids with a down payment for a home of their own, pay off debts, or cover unexpected expenses — all while staying in your home.
This guide explains what a reverse mortgage is, how it works, and whether it might be right for you or a family member.
What Is a Reverse Mortgage?
A reverse mortgage is a type of loan that lets you access up to 55% of your home’s value in tax-free cash. Unlike a traditional mortgage, you don’t make monthly payments. Instead, the interest accumulates over time and is paid back when you sell your home, move out permanently, or pass away.
In Canada, reverse mortgages are regulated and offered through a very limited network of lenders.
Who Is Eligible?
To qualify for a reverse mortgage, you must:
- Be at least 55 years old
- Own your primary residence in Canada
- Have sufficient equity in your home
- Live in a qualifying property (detached home, condo, or townhouse)
If you have a spouse, they must also be at least 55, and both of you must be listed on the mortgage.
How Much Can You Borrow?
The amount you can borrow depends on:
- Your age (the older you are, the more you can access)
- Your home’s appraised value
- The location and type of property
In general, you can borrow between 20% to 55% of your home’s value. The funds can be taken as a lump sum, in monthly payments, or a combination of both.
What Can the Money Be Used For?
There are no restrictions on how you use the funds from a reverse mortgage. Common uses include:
- Supplementing retirement income
- Paying off high-interest debts or existing mortgages
- Helping children or grandchildren with down payments
- Covering in-home care or medical expenses
- Making home improvements
What Are the Costs?
Reverse mortgages typically have:
- Higher interest rates than traditional mortgages
- Legal and closing fees
- An appraisal fee
- Optional fees if you want independent legal advice
These costs are usually deducted from the amount advanced, so you don’t need to pay them out of pocket.
Pros and Cons of a Reverse Mortgage
Pros:
- Access tax-free cash without selling your home
- No regular mortgage payments required
- Remain the owner of your home
- Flexible payout options
Cons:
- Interest accumulates over time and reduces your estate value
- May affect eligibility for certain government benefits
- Must be repaid if you move or pass away
How It Gets Repaid
A reverse mortgage is repaid when:
- The home is sold
- You move out permanently
- The last borrower passes away
The loan balance (including accrued interest) is paid from the proceeds of the sale. Any remaining equity goes to your estate or heirs.
How a Mortgage Broker Helps
I can help you understand if a reverse mortgage fits your goals. Here’s what I do:
- Explain your options clearly
- Compare offers from Canada’s two main reverse mortgage providers
- Help you estimate your borrowing power
- Review long-term impacts for your estate and heirs
- Coordinate with your lawyer and family (if needed)
Final Thoughts
A reverse mortgage isn’t for everyone, but for the right homeowner, it can unlock a more comfortable retirement and reduce financial stress.
If you’re 55 or older and want to explore your options, let’s connect. I will walk you through the process and help you decide if it’s the right move for you or your family.