As we grow older, many Canadians find themselves “house rich but cash poor.” For seniors across British Columbia, a reverse mortgage can be a smart way to tap into the equity in their home without having to sell or move.
But what is a reverse mortgage, and is it the right choice for you or your loved ones? Let’s break it down.
What Is a Reverse Mortgage?
A reverse mortgage allows homeowners aged 55 or older to borrow money using the equity in their home. Unlike a traditional mortgage, there are no regular monthly payments. Instead, the loan is repaid when you sell the home, move out, or pass away.
This type of mortgage is offered by specialized lenders in Canada, like CHIP Reverse Mortgage by HomeEquity Bank.
How Much Can You Borrow?
The amount you can borrow depends on:
- Your age (and your spouse’s, if applicable)
- The appraised value of your home
- The location and type of property
Typically, the older you are, the more equity you can access — up to 55% of your home’s value.
What Can the Money Be Used For?
There are no restrictions on how you use the funds from a reverse mortgage. Many clients use it for:
- Supplementing retirement income
- Renovating the home for safety or accessibility
- Helping family with a down payment
- Covering health care costs
- Paying off existing debt
Key Benefits
✅ Stay in your home – You don’t have to move or downsize.
✅ No monthly payments – Keep your monthly cash flow intact.
✅ Tax-free money – Reverse mortgage funds are not considered taxable income.
✅ Maintain ownership – You retain title to your home.
Things to Consider
While reverse mortgages have many advantages, they may not be right for everyone. Consider:
- Interest builds over time, reducing your home equity.
- You must keep the home in good condition and stay up to date on property taxes and insurance.
- There may be fees for setup and appraisal.
That’s why it’s crucial to speak to a qualified mortgage broker who can walk you through all your options.
Is a Reverse Mortgage Right for You?
If you’re over 55, own your home, and want to access tax-free funds without giving up where you live, a reverse mortgage might be a powerful tool. But it’s not one-size-fits-all.