A reverse mortgage is a financial product available to Canadian homeowners aged 55 and above. It enables you to convert part of your home’s equity into tax-free cash while continuing to live in your property, without the need to sell it or make regular mortgage payments.
Unlike a traditional mortgage, where you make monthly payments to a lender, a reverse mortgage works in the opposite way—the lender provides you with funds. You can receive this money as a one-time lump sum, scheduled payments, or a flexible line of credit. You retain full ownership of your home, and repayment of the loan, along with accumulated interest, is deferred until you sell the home, move out permanently, or pass away.
At AKAL Mortgages, we take the time to understand your goals and explain how a reverse mortgage could fit your financial picture. We will walk you through every option so you can make a confident, informed decision.
A reverse mortgage is a specialized loan designed for Canadian homeowners aged 55 and older. It allows you to convert a portion of your home’s equity into tax-free cash without needing to sell your property. Unlike traditional loans, you don’t have to make monthly mortgage payments while continuing to live in your home
To qualify for a reverse mortgage, you must be at least 55 years old and own your primary residence in Canada. The amount you can access depends largely on your age and the value of your home. If you share ownership, all homeowners must meet the eligibility criteria and agree to the loan.
The amount you can borrow typically depends on your age, your home’s appraised value, and its location. In most cases, you may be able to access up to 55% of your home equity. Older homeowners generally qualify for higher amounts because of shorter expected loan durations.
No, one of the main advantages of a reverse mortgage is that there are no required monthly payments. Instead, the interest is added to the loan balance over time. The loan is only repaid when you sell your home, move out permanently, or pass away.
The funds you receive from a reverse mortgage are completely tax-free, as they are considered loan proceeds rather than income. This means they won’t impact your income tax obligations. Additionally, they do not affect government benefits like Old Age Security (OAS) or Canada Pension Plan (CPP).
Yes, you remain the legal owner of your home at all times when you have a reverse mortgage. You can continue living in your property and benefit from any increase in its value. However, you are still responsible for maintaining the home and paying property taxes and insurance.
Repayment of a reverse mortgage is deferred until a major life event occurs. This typically includes selling the home, moving out permanently, or the passing of the last homeowner. At that point, the loan balance, including accumulated interest, becomes due.
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