A reverse mortgage is a loan that lets a Canadian homeowner aged 55 or older borrow against the equity in their home without making any monthly payments. Interest accumulates on the balance, and the full amount comes due when the property is sold, when the owner moves out permanently, or after the last borrower dies.
Two federally regulated lenders handle most of this business in Canada. HomeEquity Bank offers the CHIP Reverse Mortgage, and Equitable Bank offers a competing product. Between them, a qualified homeowner can typically access up to about 55 percent of the appraised value of the property. The figure you are actually offered depends on your age, the location and type of home, and its condition. Someone in their mid-eighties will be quoted a much larger percentage than someone who has just turned 55.
Qualification works in a way that surprises a lot of people. There is no income test of the kind you would face on a conventional application, so the GDS and TDS ratios that govern a normal mortgage approval are not the deciding factor. Age and home equity are. That is why the product tends to appeal to retirees who own a valuable Toronto property but show modest income on paper.
Rates sit above what a conventional borrower pays. In September 2026, Equitable Bank posted reverse mortgage rates beginning near five percent on a one-year fixed term, and longer terms priced higher. Because nothing is paid down along the way, the interest compounds against the equity you still hold. Setup costs add to that. HomeEquity Bank charges most clients a closing fee of $1,795, and an appraisal is required.
Ontario adds a consumer protection layer. Before closing, you must receive independent legal advice from a lawyer of your own choosing, usually a few hundred dollars, and the Financial Services Regulatory Authority of Ontario expects the mortgage brokerage to obtain a signed written statement from that lawyer confirming the advice was given.
Both major lenders carry a no negative equity guarantee, meaning neither you nor your estate will owe more than the fair market value of the home at the time it sells, provided the property taxes, insurance and upkeep have been maintained. Homeowners weighing this option often compare it against a HELOC, which usually carries a lower rate but demands monthly interest payments and full income qualification.
Related reading: What Is Home Equity and How Do You Calculate It in Canada?, What Is a HELOC and How Does It Work in Canada?, and Should You Downsize From a House to a Condo in Toronto?