What is a reverse mortgage and who qualifies in Ontario?

A reverse mortgage allows homeowners aged 55 and older to borrow against their home's equity without making monthly payments. The interest accumulates and is added to the loan balance, which is repaid when you sell the home, move out, or pass away.

In Canada, reverse mortgages are offered by a small number of lenders. The amount you can borrow depends on your age, your home's appraised value, and its location. Generally, the older you are, the higher the available loan-to-value ratio. Loan amounts are capped at a percentage of the home's value designed to ensure there is likely enough equity remaining when the loan is eventually repaid — protecting you and potentially your estate.

The key benefit is receiving funds — monthly income, a lump sum, or a combination — without selling your home or making payments. The main risk is that interest compounds over time, which can significantly reduce the equity available to your estate. Rates on reverse mortgages are typically higher than on conventional mortgages. There are also fees for obtaining one, including legal and appraisal costs. Independent legal advice is required before you sign, and a qualified lawyer should explain the implications for your estate and any co-owners of the property.