Canada reverse mortgage 2027: CHIP, rates, eligibility, and how much you can borrow

A reverse mortgage is a loan secured against your home that lets you access a portion of your home equity without monthly mortgage payments. The loan balance — principal plus accumulated interest — is repaid only when you sell the home, move out permanently, or die (at which point the estate repays the loan). To qualify, all homeowners on title must be at least 55 years old. The maximum you can borrow is typically up to 55% of the home's appraised value, depending on age, location, and property type. In Canada, HomeEquity Bank's CHIP Reverse Mortgage holds the dominant market share. Equitable Bank also offers a reverse mortgage product.

The maximum loan amount depends on: (1) Age — older borrowers can access a higher percentage; (2) Home value — a higher appraised value means a larger maximum; (3) Property type and location — single-family homes in major cities qualify for the highest amounts; condos and rural properties qualify for less; (4) Interest rate option chosen — fixed vs variable affects the maximum. As a rough guide: a 70-year-old borrower in Toronto may access 40–55% of a $1M home ($400,000–$550,000). A 60-year-old may access 25–35%. The minimum age is 55 for all homeowners on title. Use HomeEquity Bank's reverse mortgage calculator for a personalized estimate.

Reverse mortgage rates in Canada are consistently higher than regular mortgage rates — typically 1.5–3.5% above equivalent term posted rates. In 2027, 5-year fixed reverse mortgage rates from HomeEquity Bank are approximately 7.5–9.0%, compared to standard 5-year fixed insured rates of 4.5–5.5%. The spread exists because: the lender takes on the risk of the loan balance growing over time, possibly approaching the home's value; no monthly payments means the lender cannot easily identify early repayment risk; and limited competition in the reverse mortgage market. Interest compounds over the life of the loan — on a $300,000 loan at 8% over 10 years, the balance grows to approximately $648,000 before the home is sold. Compare standard renewal rates at the Canadian mortgage calculator.

Because interest compounds with no monthly payments, the loan balance grows over time. HomeEquity Bank guarantees the "no negative equity" protection: you will never owe more than the home's fair market value at the time of repayment, as long as you meet the loan obligations (maintain the property, pay property taxes and insurance). However, equity erosion is real: a $300,000 loan at 8% for 15 years grows to approximately $952,000 — consuming most of the equity in an average Canadian home. This is why reverse mortgages are recommended for borrowers who don't plan to pass the home to heirs, or who need liquidity and have no cheaper alternatives. The FCAC reverse mortgage guide explains the long-term equity impact clearly.

Yes — you can repay a CHIP Reverse Mortgage at any time. However, early repayment before the term expires may trigger a prepayment penalty — similar to a regular closed mortgage. Penalties vary by term type and how early in the term you repay. If the home is sold because one owner moves to long-term care and the other stays, the reverse mortgage typically does not need to be repaid until the last borrower moves out or dies. If one borrower on the mortgage dies but the other remains in the home, the loan continues. Early repayment penalties can be significant — get a written payout quote before planning to sell or refinance. Full prepayment terms are outlined in the reverse mortgage agreement and vary by product. See HomeEquity Bank's reverse mortgage FAQ.

Before committing to a reverse mortgage, consider: (1) HELOC (Home Equity Line of Credit) — if you qualify (income/credit requirements apply), a HELOC at prime + 0.5–1.0% is dramatically cheaper than a reverse mortgage, and you only pay interest on what you draw; (2) Downsizing — selling and buying a smaller property or renting releases 100% of the equity without ongoing interest; (3) Conventional refinance — refinancing to a new mortgage with a lower payment (requires income qualification and monthly payments); (4) Family lending — some families arrange a private loan secured against the property at a negotiated rate; (5) Government benefits check — ensure you're receiving all eligible Old Age Security, Guaranteed Income Supplement, and provincial senior supports before drawing on home equity. The Government of Canada pension and benefit programs may provide income without touching home equity.