Reverse mortgage estimator
CHIP-style reverse mortgages let homeowners 55+ tap home equity without monthly payments. Interest compounds onto the balance — see the long-run impact.
Your scenario
Result
No regular payments — interest compounds. The lender is repaid when you sell, move out, or pass on. Estimate only; actual terms vary by lender.
What a reverse mortgage actually is in Canada
A reverse mortgage is a loan secured against your home that lets homeowners aged 55+ tap home equity without making monthly payments. The two providers in Canada — HomeEquity Bank (CHIP) and Equitable Bank — both work the same way: interest compounds onto the balance, and the loan is repaid when you sell, move out, or pass away.
How much you can borrow
The maximum loan-to-value depends primarily on the youngest borrower's age, then on home value, location, and home type. Typical caps:
- Age 55–59: ~25% of home value
- Age 60–64: ~33%
- Age 65–69: ~40%
- Age 70–74: ~45%
- Age 75–79: ~52%
- Age 80+: ~55%
Major Canadian cities and detached homes tend to push the LTV higher within these ranges; rural condos pull it lower.
The compounding trap — and the cap
Because no payments are made, interest is added to the loan balance every month. At a typical 8.5% rate, a $300,000 reverse mortgage balloons to roughly $680,000 after 10 years and $1.5 million after 20. The legal protection: by law, you (or your estate) can never owe more than the home is worth at the time of repayment — called the no negative equity guarantee.
When a reverse mortgage makes sense
- You want to age in place but cash flow is tight (fixed-income retirement)
- You'd rather not sell the family home or downsize
- You need a lump sum for a renovation, medical cost, or to help a child buy
- You have substantial equity but limited investments to draw on
When it doesn't
- You plan to move within 3–5 years (closing costs + setup fees take that long to amortize)
- You could refinance into a regular HELOC instead (lower rate, more flexibility — see HELOC calculator)
- Leaving the home to heirs is a high priority and compounding will consume most of the equity
- You qualify for a regular mortgage and could service the payments
Costs to budget for
- Setup / appraisal: $1,500–$2,500
- Independent legal advice (required): $400–$700
- Higher interest rate than a regular mortgage — typically 1–3% above conventional rates
- Discharge fee at exit: $300–$600 (waived in some cases)
Related
Mortgage agent or broker? Calculators like this one embed on the website you already have, and Mortgage360 campaign landing pages capture the enquiries they start straight into your CRM.