Reverse Mortgage in Ontario in 2027: How It Works

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 10 min read — How reverse mortgages work in Ontario in 2027, what they cost, how the balance grows, and why lower GTA prices mean smaller limits.

This guide is for homeowners in Ontario aged 55 and older, and their adult children, who are weighing a reverse mortgage in 2027. You will get how it works step by step, how much you could borrow at today’s GTA prices, what it really costs over time, and the questions to settle before you sign.

What is a reverse mortgage in Ontario?

A reverse mortgage is a loan secured on your home that you do not have to pay back month by month. You keep owning the home. The Financial Consumer Agency of Canada (FCAC) explains that interest is added to the loan, so the amount you owe grows over time. The loan is repaid when you sell, move out, the last borrower dies, or you default.

Ontario’s rules give the same picture. The standards for mortgage brokerages (O. Reg. 188/08) treat a mortgage as a reverse mortgage when no principal repayment is due while the last borrower lives in the home, and repayment is triggered by death, a sale, buying another principal residence, moving out with no reasonable prospect of returning, or a default.

The money is tax-free because it is a loan, not income. FCAC says it does not affect Old Age Security or the Guaranteed Income Supplement.

Who qualifies for a reverse mortgage in 2027?

According to FCAC, reverse mortgages are usually for homeowners aged 55 or older, and the home must normally be your primary residence, which means you live there at least six months a year. Other conditions you will meet:

• Everyone on title counts. The amount depends on the ages of all the people on title, the home’s type, condition and appraised value, and the lender. HomeEquity Bank’s own guide to its CHIP Reverse Mortgage says it uses the age of the youngest applicant.
• Existing debts come first. Any mortgage or home equity line of credit on the home usually has to be paid off, and the reverse mortgage can be used to do it.
• You keep paying the basics. Property tax, home insurance and upkeep stay your job. Letting the home fall into disrepair can count as a default.
• A lawyer signs off. In Ontario, a mortgage brokerage cannot arrange a reverse mortgage until it gets a lawyer’s signed statement that you received independent legal advice. HomeEquity Bank also says it requires a review with an independent lawyer.

The amount is based mainly on your age and your home rather than on your income, unlike a regular mortgage or a line of credit. That is the main reason people on a fixed pension look at it.

How much can you borrow with a reverse mortgage?

FCAC says you can usually borrow up to 55% of your home’s current value. Younger borrowers get less. Here is what 55% of a typical detached house works out to across the GTA, and how much that ceiling has moved as prices fell since 2024.

Source: TRREB MLS data via REALM, January–October 2024 and January–October 2026, median sold price of detached homes by municipality. The 55% ceiling is my arithmetic on FCAC’s stated maximum; actual offers depend on age, the appraisal and the lender, and are often lower.

The 2027 lesson: the limit follows today’s appraisal, not what the house was worth at the peak. In Brampton the ceiling on a median detached house is about $97,000 lower than it would have been two years earlier. If you are counting on a reverse mortgage to pay off an existing mortgage, check the numbers against a current value, not an old one.

How do CHIP and the other reverse mortgages work?

FCAC lists HomeEquity Bank and Equitable Bank as federally regulated institutions that offer reverse mortgages, along with provincially regulated lenders and mortgage brokers. HomeEquity Bank sells the CHIP Reverse Mortgage, and many people search for “CHIP” when they mean reverse mortgages in general. FCAC notes that federally regulated institutions generally offer the protections of Canada’s Financial Consumer Protection Framework, and provincially regulated lenders may not offer the same ones.

You can usually take the money in one of three ways, according to FCAC:

• Lump sum. All of it at once. You pay interest on the full amount from day one, even on money sitting in the bank.
• Partial lump sum, then draws. Often an initial amount of about $25,000, with more later. Later draws may carry fees or change the rate.
• Regular advances. Typically about $1,000 a month or $3,000 every three months, often after an initial amount of about $20,000.

If you only need money over time, drawing it as you go usually keeps the balance smaller than taking it all at the start.

What does a reverse mortgage cost?

FCAC says reverse mortgage rates are usually higher than regular mortgage or line of credit rates. Costs can include an appraisal, set-up fees, legal fees, closing costs and prepayment penalties if you repay early. Some fees are added to the loan and some are paid up front. I could not find a dated, published rate sheet I could verify for this guide, so get a written quote from each lender.

The bigger cost is time. Because nothing is paid, interest is charged on interest. Here is how a $300,000 balance grows at three example rates if you make no payments.

Source: my arithmetic, interest added twice a year, no payments, no new draws, no fees. Example rates only, not lender quotes.

At 7%, the balance roughly doubles in about ten years. Whether that is a problem depends on what the house does over the same years, and on what you want to leave. Some lenders let you make optional interest payments to slow the growth. HomeEquity Bank’s guide says it offers that option. Ask whether it applies to the product you are offered.

Did the 2026 rate hike change reverse mortgages?

Indirectly, yes. The Bank of Canada raised its policy rate from 2.25% to 2.50% on 28 October 2026, its first increase in more than three years, and said a further increase could be needed. Big-bank prime rose to 4.70%. The Bank expects inflation to average about 3% in 2027 and return to 2% by mid-2028.

Reverse mortgage rates are set by each lender, not by the Bank of Canada, but they live in the same world. Higher borrowing costs mean a growing balance grows faster. If you are choosing between a variable and a fixed rate, ask the lender how often a variable rate can change and what a five-year fixed costs. The next Bank of Canada decision is on 9 December 2026, and the 2027 dates start on 27 January.

What are the reverse mortgage pros and cons?

Pros

• No regular payments while you live in the home.
• The amount is based on your age and home, so a modest pension is less of a barrier.
• You stay in your home and keep title.
• Tax-free money that FCAC says does not affect OAS or GIS.

Cons

• Higher rates than a regular mortgage or line of credit.
• The balance grows, so there is less equity for you later and for your heirs.
• Upfront and exit costs, including prepayment penalties if you sell early.
• FCAC warns it may stop you getting a line of credit on the same home later.

What happens when you die, move into care or sell?

The loan comes due. The home is usually sold and the lender is repaid first, with interest and any fees. What is left goes to you or your estate. If the home is in your estate, Ontario’s estate administration tax applies to the value above $50,000.

The “moving out” trigger is the one to read most closely. Ontario’s definition refers to vacating the home with no reasonable prospect of returning. A hospital stay is not the same as a permanent move into care, but the contract decides how each lender treats it. Families should read that clause together.

Reverse mortgage, line of credit or downsizing in 2027?

A reverse mortgage is one of three main ways to use home equity. A home equity line of credit usually costs less, but you need income to qualify and must pay at least the interest. Selling and moving somewhere smaller frees the most money with no debt, but it means moving. I compare all three in reverse mortgage vs HELOC vs selling, and the earlier reverse mortgage pros and cons guide covers the questions for couples.

Lower 2026 prices cut both ways. They shrink the reverse mortgage limit, but they also make the smaller home cheaper. In Mississauga, for example, the median detached house sold for $1,225,000 and the median condo apartment for $485,000 from January to October 2026, a gap of $740,000 before costs (TRREB MLS data via REALM). See what your house buys when you downsize for more places.

Before borrowing at all, check smaller help. Toronto and other GTA cities run property tax relief programs for eligible seniors, listed in property tax relief for seniors in the GTA.

What to do next

1. Get a current value for your home with the estimator on this page, so you know what 55% really means today.
2. Ask at least two lenders, or a mortgage broker, for a written quote with every fee and the projected balance at 5, 10 and 15 years.
3. Read the default, move-out and estate repayment clauses with your own lawyer, as Ontario rules require for brokered reverse mortgages.
4. Price the alternatives: a line of credit if you have income, and what selling would free after costs.
5. If downsizing is on the table anywhere in the GTA, ask me for a written value and a plan for your next home before you decide.

Frequently asked questions

Sources

• Financial Consumer Agency of Canada: Reverse mortgages
• O. Reg. 188/08, Mortgage Brokerages: Standards of Practice, s. 29 (e-Laws)
• HomeEquity Bank: A guide to the CHIP Reverse Mortgage (brochure)
• Bank of Canada raises the policy rate by 25 basis points to 2½% (28 October 2026)
• Bank of Canada publishes its 2027 schedule for policy interest rate announcements
• Bank of Canada: Policy interest rate

Related reading

• The Bank of Canada Raised Rates: What It Means for GTA Buyers, Sellers and Owners
• Variable-Rate Mortgage After the Hike: How Much Your Payment Changes
• Should I Lock In My Variable Mortgage Before 2027?
• Mortgage Renewal in 2027 After the Rate Hike: Your Options in Ontario