By Michael A. Jones, PREC | Royal LePage Kelowna
A home can hold a considerable amount of wealth while leaving its owner short of cash. That becomes frustrating when the market is slow and selling means accepting less than you hoped.
For some Canadian homeowners, a reverse mortgage offers another possibility: access part of the equity, continue living at home and make the selling decision with less immediate financial pressure.
In my opinion, that is worth exploring. Your home should support your life, whether that means adapting it, paying for help or having more room in the budget to enjoy your days. But borrowing to wait for a better market has a cost. A reverse mortgage should be assessed against your needs and alternatives, not a promise that prices will recover.
Here are the questions I would want answered before moving ahead.
What Is a Reverse Mortgage?
A reverse mortgage is a loan secured against your home, generally for homeowners aged 55 or older. It lets you access equity without selling. Regular mortgage payments are generally not required; unpaid interest is added to what you owe. You still own the property. FCAC's reverse mortgage overview
Who Qualifies and How Much Can I Borrow?
FCAC says homeowners can usually borrow up to 55% of their home's current value, but that is not an entitlement. Your age, other owners' ages, the property and the lender affect the offer. The home usually needs to be your principal residence. FCAC
Lenders also have location and property criteria. Equitable, for example, requires borrowers to demonstrate they can cover ongoing property expenses. Existing mortgages or other secured borrowing may need to be paid out from the advance, reducing the cash left for you. Ask for a net-proceeds estimate, not just a headline borrowing limit. Equitable's product information and FAQ
Could It Help If My Home Is Not Selling?
Potentially, if you qualify and want to keep living there. Access to equity may relieve cash-flow pressure and give you time to reconsider when, or whether, to sell.
My opinion is that this can be valuable when the home still suits your life and a rushed sale would create problems. I would be much more cautious about taking out a reverse mortgage simply to wait a few months for a higher offer.
Ask a mortgage specialist to compare the full cost of borrowing and keeping the home with realistic sale options today. Include interest, setup costs, any early-repayment charge, property taxes, insurance and upkeep. Use a scenario where prices stay flat or fall, not only one where they rise.
If your home is already listed, tell the lender before applying. Ask whether the property and your intended sale timeline qualify; do not assume they do. Some products are designed for shorter periods. HomeEquity Bank describes CHIP Open as short-term financing with no penalty for full repayment, so a specialist should compare the right product rather than treat all reverse mortgages as identical. HomeEquity Bank's product overview
What Does It Cost If There Are No Monthly Payments?
Rates are usually higher than conventional mortgages or HELOCs. Interest still accrues even when you make no regular payments. Depending on the contract, interest is charged on accumulated interest as well as the amount borrowed. Equitable explains that its fixed-rate products compound semi-annually and its adjustable-rate products monthly. FCAC and Equitable's cost explanation
Appraisal, setup or processing, and legal costs also matter. Fees deducted from the advance reduce the money you receive, and a quoted legal certificate fee may not cover all your lawyer's work. Ask for an itemized quote and the cost of repaying early. Bloom's fee information
Consider a simplified illustration, not a lender quote: $100,000 borrowed at a constant 7% annual rate, compounded annually, would grow to about $140,255 after five years if nothing were repaid. That is roughly $40,255 in interest, before fees or further borrowing. Actual rates, compounding and terms differ.
The useful question is whether the value you gain from the money and staying in your home justifies that cost.
Does the Bank Own My Home?
No. You remain the owner, with a mortgage registered against the property. You must still meet the contract's requirements, including paying property taxes and insurance and maintaining the home. Failing to meet those obligations can put the loan into default. Having no required monthly loan payment does not mean having no housing bills. Equitable's FAQ and product conditions
What Can I Use the Money For?
Home repairs, accessibility changes, household help or everyday expenses may be reasons to explore the option. Some homeowners also want to travel or spend more time doing things they enjoy.
My suggestion is to start with a specific purpose and budget. Ask whether you can draw funds as needed rather than borrow the maximum immediately. Keep enough flexibility for future care, repairs and a possible move. A pleasant lifestyle today matters, and so does having choices later.
Are the Funds Taxable and Will They Affect My Benefits?
The borrowed money itself is not taxable and does not affect Old Age Security or Guaranteed Income Supplement benefits, according to FCAC. That statement applies to the loan proceeds, not automatically to income you might earn by investing them. Ask a qualified tax professional how your intended use of the money could affect your situation. FCAC
When Must the Loan Be Repaid?
Selling the property normally requires repaying the mortgage. Moving out permanently, the last borrower's death or a contract default can also trigger repayment. Exact deadlines and care-related provisions vary.
For example, CHIP describes 180 days after the last mortgage holder dies and one year after the last mortgage holder moves into a retirement or long-term-care residence. These are CHIP's published terms, not a rule for every Canadian reverse mortgage. Confirm your own contract and obtain a payout statement before planning a sale. CHIP's repayment explanation
What Happens to My Spouse and My Estate?
Ask who is named as a borrower and what happens if either person dies or moves into care. CHIP says a surviving borrower can remain while the mortgage conditions are met. A spouse who is not a borrower should not assume the same protection. Have your lawyer explain the position before signing. CHIP
The estate must deal with the debt within the lender's deadlines. That does not always mean selling: Bloom describes repayment using other funds or refinancing as possibilities. Its published estate deadline is six months. Bloom's FAQ
Ask about any no-negative-equity guarantee and its exclusions. Equitable's guarantee depends on meeting the mortgage obligations and excludes fees and interest accumulated after the mortgage becomes due. Such protection does not promise that a particular inheritance will remain. Equitable's product conditions
What Should I Compare Before Deciding?
Compare a reverse mortgage with a conventional mortgage or HELOC if you qualify and can manage the payments. Also consider whether selling, downsizing or renting would better meet your needs. FCAC's alternatives
For someone who wants to move, a softer market deserves a two-sided look. Your home may sell for less than you hoped, but your next purchase may also cost less. My suggestion is to compare the full move, including transaction costs and the price difference between the homes, before assuming waiting will leave you better off.
Questions to Take to a Mortgage Specialist
- How much cash would I actually receive after existing debts and fees are paid?
- What would my balance and total costs look like after one, three, five and ten years?
- What would I owe if I sold after six months or a year?
- Can I take smaller advances, and what fees or rate changes apply?
- What happens if I move into care, my spouse stays behind or one of us dies?
- Which conditions could put the mortgage in default?
- How would this affect my ability to move or borrow later?
Ask for the answers in writing and have an independent lawyer review the contract. A licensed mortgage specialist with reverse-mortgage experience can compare the actual products and explain whether one fits your circumstances.
My View
A reverse mortgage can be a useful tool for an eligible homeowner whose wealth is tied up in a home they want to keep. It may also ease the pressure to sell during an unfavourable market. I would explore it as part of a housing and financial plan, with clear costs and an exit strategy, rather than as a bet on rising prices.
If you are weighing staying against selling in Kelowna or the Okanagan, I can help you assess the real estate side: your home's market position, realistic selling options and what a move might involve. Then bring that picture to your mortgage specialist. Let's talk through your housing options.
Related reading: Retirement and Housing in the Okanagan and Should I Downsize My Home in Kelowna? 10 Questions.
Explore more articles about mortgages, retirement and selling.
Sources
- Financial Consumer Agency of Canada: Reverse mortgages.
- Equitable Bank: FAQ, product sheet and understanding costs.
- HomeEquity Bank: CHIP repayment and product overview.
- Bloom: FAQ and rates and fees.
Lender links explain their own products and are not endorsements. Terms can change.
This article provides general Canadian information and my personal opinion, not individualized mortgage, financial, tax or legal advice. Reverse mortgages are loans secured against your home; interest and fees can reduce your remaining equity and estate. Eligibility, available amounts, repayment deadlines, guarantees and penalties vary by lender and contract. Accessing equity does not guarantee a future sale or market recovery. Consult a licensed mortgage specialist experienced in reverse mortgages, and obtain independent legal and tax advice appropriate to your circumstances. Michael A. Jones is a licensed REALTOR with Royal LePage Kelowna, not a mortgage broker, lender, financial advisor, tax advisor or legal professional. Information checked October 23, 2026.