Published 17 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
A reverse mortgage lets homeowners 55 or older borrow part of their home’s value with no monthly payments. Interest is added to the balance and repaid when the home is sold or the last borrower moves out or dies. Rates and fees are higher than a regular mortgage, and the balance grows every month.
A reverse mortgage lets homeowners aged 55 or older borrow against their home without making monthly payments. It can let someone stay in a paid-off house on a tight income. It also shrinks the equity left for them and their family, sometimes faster than they expect.
How it works
- Borrowing: you borrow a portion of your home’s value as a lump sum, scheduled advances, or both.
- Payments: none required while you live there. Interest is added to the balance.
- Repayment: the loan and interest are repaid when you sell, move out, or when the last borrower dies.
- Ownership: you keep title. You still pay property tax and insurance and maintain the home.
How much you can borrow
Lenders base the amount on your age, the home’s value, its location and type. The older you are, the more you can borrow. The maximum is a limited share of the home’s value; providers advertise up to around 55%. First the loan has to pay off any existing mortgage on the home.
What it costs
- Interest: rates are higher than a regular mortgage.
- Compounding: the balance grows every month because nothing is paid down.
- Fees: expect an appraisal, independent legal advice, and setup or administration fees.
- Early exit: selling or moving in the first few years can trigger prepayment penalties.
As an illustration of compounding only: at 7%, a balance roughly doubles in about 10 years if nothing is paid. Ask any lender for a projection of your balance at 5, 10 and 15 years before signing.
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Market context
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A range is a starting point.
A strategy is what sells.
This model doesn’t know that your neighbour’s identical semi went $80,000 over asking last month, or which two upgrades actually pay back in your area. That conversation is free and takes twenty minutes.
When it can make sense
- You want to stay put and have little other income.
- Downsizing wouldn’t free much money after moving costs, land transfer tax and a similar-priced smaller home.
- Your family agrees, and leaving the full equity to heirs isn’t a priority.
Alternatives worth comparing
- Downsize. In Toronto, moving from a detached house to a condo or bungalow can release more money with no growing debt.
- A home equity line of credit. Cheaper, but requires monthly interest payments and income to qualify.
- Rent out part of the home. Legal secondary suites and garden suites can add income.
- Government programs. Ontario and Toronto offer property tax deferral and relief programs for eligible seniors and low-income homeowners; check eligibility with the City.
Questions to ask before signing
- What will the balance be in 10 and 15 years at the quoted rate?
- What fees are due at signing and at repayment?
- What penalties apply if I sell early or move into care?
- What happens if my spouse is not on the loan?
The takeaway
Ask for a 10- and 15-year balance projection, compare it with what downsizing would actually free after costs, and get independent legal advice before signing.
Talk it through with me
Get a first-time buyer plan
Tell me your savings, income range and target area. I will send a realistic price range and next steps.
I will come back to you personally, usually the same day. If it is urgent, call or text 833-330-1925.
Frequently asked questions
Who can get a reverse mortgage in Ontario?
Homeowners aged 55 or older, subject to the lender’s criteria.
Do I make monthly payments?
No. Interest is added to the balance and repaid when the home is sold or the last borrower moves out or dies.
Can I lose my home?
You can default if you stop paying property tax or insurance, or don’t maintain the home.
Is downsizing better than a reverse mortgage?
It depends on how much equity a move would actually free after costs, and whether you want to stay.
Sources
- Financial Consumer Agency of Canada — reverse mortgages — how reverse mortgages work, costs and risks
Related reading
- Best Realtor for Downsizing in Toronto (2026): How to Choose the Right Help
- Aging in Place or Downsizing in Etobicoke: An Honest Comparison
- Capital Gains When Downsizing in Ontario
- Helping Your Parents Downsize in Etobicoke
- Renovate or move? How Toronto homeowners decide in 2026
About the author — Jatin Dua, Toronto and GTA real estate broker
I am Jatin Dua, Broker of Record and co-founder of RE/MAX Quantum Realty Inc., Brokerage, Unit 101, 799 The Queensway, Etobicoke. I work with buyers and sellers across Toronto and the GTA, with deep local knowledge of the west end. Four-plus years of active GTA transactions and over $100 million in sales volume. Every market figure here comes from TRREB’s published tables and every rule from RECO or Ontario legislation, so you can check all of it without asking me.
Reach me at connect@jatindua.com or 833-330-1925, or book a call.