Is a reverse mortgage a good idea? Four Canadian households
A reverse mortgage is a good idea when you want to stay home, need money, can't or don't want to make payments, and accept leaving less to heirs. It's a poor idea if you may move within a few years, can qualify for cheaper credit, or plan to borrow young and draw for decades.
Figures as of November 1, 2026.A reverse mortgage tends to be a good idea when you're older (75+), want to stay in your home for many years, can't comfortably carry HELOC payments, and leaving the full home to heirs isn't the priority. It tends to be a poor one in your 50s or early 60s, if you may move within a few years, or if a HELOC or downsizing would work. Four households below show why.
Names are illustrative; the numbers are our engine's output with today's default rates (6.49%, then 7.09%), 3% home growth and 4% investment returns.
Rina, 81, Halifax, wants to age at home
Home $520,000; needs $40,000 now and $900 a month for life. Estimated reverse-mortgage maximum: 52% of value.
| Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|
| not possible | $456,025 | runs out at 87 | $131,611 |
The HELOC would need about $198 a month in interest at first and $666 by 92, paid from income, plus income to pass the stress test.
Our reading: If she can't carry HELOC interest on a pension, a reverse mortgage fits: at 81 she qualifies for a large share, fewer years of compounding lie ahead, and she stays home. It leaves $418,817 at 92. Most left at 92: the HELOC.
Dev and Priya, 58 and 60, Mississauga, want early retirement income
Home $1,100,000, $150,000 mortgage; needs $2,000 a month for 7 years. Estimated reverse-mortgage maximum: 25% of value.
| Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|
| runs out at 63 | not possible | runs out at 63 | runs out at 81 |
Our reading: Probably not: at 58 they qualify for a small share, and $2,000 a month would exhaust it by about age 63. A HELOC set up while they still have employment income, or a later reverse mortgage, fits better. Most left at 85: none of the routes.
Gord, 72, Kelowna, $70,000 for repairs
Home $900,000; needs $70,000 now. Estimated reverse-mortgage maximum: 44% of value.
| Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|
| $1,083,689 | $1,122,469 | $1,097,803 | $687,695 |
The HELOC would need about $307 a month in interest at first and $307 by 85, paid from income, plus income to pass the stress test.
Our reading: Compare with a HELOC first: if he can carry about $307 a month of interest, it's cheaper. If not, the reverse mortgage still leaves $1,083,689 at 85. Most left at 85: the HELOC; with no monthly payments, downsizing.
Louise, 76, Laval, children want the house
Home $600,000; needs $1,200 a month for life. Estimated reverse-mortgage maximum: 48% of value.
| Reverse mortgage | HELOC | Downsize | Sell and rent |
|---|---|---|---|
| $517,211 | $570,847 | runs out at 87 | $186,663 |
The HELOC would need about $32 a month in interest at first and $843 by 90, paid from income, plus income to pass the stress test.
Our reading: Talk to the family first: the reverse mortgage leaves $517,211 at 90, against about $862,176 with no loan at all. A family loan, or the children repaying the loan later, are options. Most left at 90: the HELOC; with no monthly payments, the reverse mortgage.
Rules of thumb, tested
- "Wait until 70." Partly true: the share rises from 28% at 60 to 42% at 70 in our estimate. But only worth it if you don't need the money now.
- "Take only what you need." True: monthly advances cost far less interest than an unused lump sum.
- "A HELOC is always cheaper." Only if you can pay the interest every month and keep qualifying.
Is it a good fit for you?
| Good fit | Poor fit |
|---|---|
| You want to stay in your home for many years | You may move or need care within a few years (prepayment charges) |
| Income is short and a HELOC wouldn't be approved | You'd qualify for a cheaper HELOC and can pay its interest |
| You're in your 70s or 80s | You're in your early 60s (decades of compounding) |
| Your heirs know and agree | Leaving the house intact matters most |
Three questions to answer first
- How long will you stay? Under three years, the prepayment charges and set-up costs dominate.
- Could you pay a HELOC's interest? If yes, and you'd qualify, it's usually cheaper.
- What do you want to leave? Use the comparison's "leave at least" solver to find the most you can borrow and still leave that.
| Home | $1,250,000 |
|---|---|
| Mortgage | $180,000 |
| Product | CHIP6.49% |
| Owed at 85 | $882,991 |
| Left at 85 with the reverse mortgage | $1,460,643 |
| Left at 85 if they downsize | $1,892,518 |
| Cost of staying, by 85 | $431,875versus downsizing |
Open this example in the calculator →Computed by our engine with the lender terms and rules on the methodology page.Computed November 1, 2026.
What this means for you
Borrowing young is the expensive case: the balance has 25 or 30 years to compound. If you're in your early 60s, compare paying the mortgage down, a HELOC while you still have income, or waiting.
Use the balance calculator to see the cost of starting at 62 versus 72.
Frequently asked questions
What age is best for a reverse mortgage?
There's no best age, but older borrowers qualify for a larger share of value and face fewer years of compounding. Our estimate rises from about 20% at 55 to 47% at 75 and the 55% maximum around 90.
Primary sources
- Financial Consumer Agency of Canada — Reverse mortgages (effective October 15, 2025). Checked .
- HomeEquity Bank — CHIP Reverse Mortgage rates (special rates as of October 29, 2026) (effective October 29, 2026). Checked .
- HomeEquity Bank — CHIP posted rates (applicable upon reset). Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (effective January 29, 2026). Checked .
- Financial Consumer Agency of Canada — Selling a home (costs, realtor commissions) (effective October 10, 2025). Checked .