Reverse Mortgage Calculator Canada — How Much Equity Will Actually Be Left?

You're 55 or older, you own your home, and most of your net worth is sitting in the walls rather than the bank. A reverse mortgage lets you take some of it out as tax-free cash without selling and without moving.

The word "reverse" is literal. Instead of you paying the bank every month, the bank pays you — and the interest is added to the balance rather than billed to you. Nothing is due until the last borrower sells, moves out permanently, or dies. Then the loan plus all the accumulated interest comes out of the sale proceeds, and whatever's left belongs to you or your estate.

You keep the title. The lender doesn't own your home and can't make you leave — provided you keep the property taxes and insurance current and maintain the place.

Canada's reverse mortgage market has grown substantially in recent years, and competition has genuinely intensified: where HomeEquity Bank (the CHIP Reverse Mortgage) was once the only real option and remains the largest by volume, Equitable Bank, Bloom and Home Trust now compete hard on rate, and all four cut their base pricing within weeks of each other in 2026. In November 2025, Bloom launched Canada's first lifetime fixed-rate reverse mortgage — locking your rate for the life of the loan rather than just an initial term, which removes renewal risk entirely.

The cap is 55% of appraised value with CHIP's standard product, and up to 59% with certain broker channels or Equitable Bank's higher-LTV product. Home Trust and Equitable's products designed for borrowers 70+ can go further still, typically pricing at a higher rate for the privilege.

The logic is simple and slightly grim: the older you are, the more you get, because the lender expects the loan to run for fewer years before it's repaid. It's the same actuarial maths that drives annuity rates.

An existing mortgage must be cleared out of the proceeds. If you owe $150,000 and qualify for $280,000, the cash that actually reaches you is $130,000 minus fees — not $280,000. That catches people out constantly.

Here is the entire reverse mortgage decision, compressed into two numbers.

Your home appreciates. Long-run Canadian average, call it 3% a year. Meanwhile the loan compounds — semi-annually, no payments — at a rate that as of mid-2026 sits roughly between 6.2% and 6.7% at the major lenders for standard products, rising to around 7.7% for higher-LTV products aimed at borrowers 70 and older.

Even at the lower end of that range, the loan grows more than twice as fast as the asset it's secured against.

At 6.75%, a balance doubles roughly every 10½ years. Borrow $200,000 at 70 and by 80 you owe around $393,000. By 90 you owe around $772,000. Your $700,000 home, growing at 3%, is worth about $940,000 at 80 and $1.26 million at 90.

So in that example the equity does survive — but look at what happened to it. You started with $700,000 of equity and ended with roughly $490,000 of it, in a house worth $1.26m. The loan ate roughly 60% of your home's growth.

Change one variable and it collapses. Drop appreciation to 1%, or push the rate toward 7.7% on a higher-LTV product, or borrow at 55 instead of 70, and the lines cross — the loan overtakes the house, and your estate gets nothing.

That's not a scandal. It's arithmetic, and it's exactly what you signed up for. But you should see the chart before you sign, not after — and the calculator above draws it with your numbers, including the year the lines cross if they do.

This is the part of the case that actually holds up, and it's specific to Canada.

A reverse mortgage is a loan, not income. So the money is tax-free, and — critically — it is invisible to income-tested benefits. It does not reduce your Old Age Security. It does not claw back your Guaranteed Income Supplement.

Now compare that with the obvious alternative: taking the same money out of your RRIF. That withdrawal is fully taxable income. It pushes up your taxable income, which can trigger the OAS recovery tax, and for anyone receiving GIS it can slash the supplement — GIS is reduced by roughly 50 cents for every dollar of other income.

So a retiree on GIS who needs $30,000 might have to withdraw far more than $30,000 from a RRIF to net it, once tax and lost benefits are counted. The same $30,000 from a reverse mortgage arrives whole, and their benefits don't move.

That's a real, calculable advantage — and for lower-income retirees it can outweigh the ugly compounding. This is the case where a reverse mortgage genuinely earns its keep.

The guarantee also has conditions. It applies only while you keep property taxes and insurance current, maintain the property, and meet the terms of your agreement. It typically excludes administrative costs and interest accrued after the due date — so an estate that drags its feet selling the home can still find itself out of pocket.

Nobody in the reverse mortgage industry wants to run this comparison. So here it is.

The rule is blunt: if you can comfortably afford the monthly interest payments, a HELOC is the better financial product. A slightly cheaper rate, and the balance doesn't snowball, because you're servicing it.

A reverse mortgage exists for people who can't make those payments — or who can't qualify on income, or who simply cannot bear the risk of a lender reducing their limit in their eighties. That's a real need, and the premium buys real certainty. But go in knowing you are paying a premium for the privilege of not paying.

Sell the $700,000 house. Buy a $450,000 condo. Pay maybe 6% in selling costs. You walk away with roughly $208,000 in cash, no debt, no interest, and no compounding eating your estate for the next twenty years.

That is more cash than most reverse mortgages will hand you, and it costs you nothing per year.

So why doesn't everyone do it? Because moving is not a financial decision. It's the garden you planted, the neighbours you've known for thirty years, the stairs you know in the dark, the spare room where the grandchildren sleep. Those things are not on any spreadsheet and they are not irrational.

But you should price them. If a reverse mortgage costs you $300,000 of estate value over twenty years, then that is the price you are paying to stay put — and it is entirely legitimate to look at that number and decide it's worth it. What isn't legitimate is never being shown the number at all.

The comparison mode above runs it for you: reverse mortgage, HELOC, and downsizing, side by side, with the equity remaining under each.

Rates. Base 5-year fixed rates fell notably through 2026 — as of mid-year, Equitable Bank and Home Trust posted the lowest at around 6.23%, followed by Bloom at roughly 6.33% and HomeEquity Bank (CHIP) around 6.39%. Higher-LTV products aimed at borrowers 70+, like Equitable's Flex PLUS, start closer to 7.7%. All are well above a regular mortgage, and the reason is straightforward: the lender might wait twenty-five years to be repaid. Fixed rates compound semi-annually under the Interest Act; variable typically compounds monthly.

Closing fee. Around $1,795 at HomeEquity Bank, or $995 at Equitable Bank and Home Trust — deducted from the proceeds rather than paid up front. It covers legal and administrative costs, discharging any prior mortgage, and registration.

Appraisal and legal. Budget $300–$600 for the appraisal, plus your own lawyer — you are required to get independent legal advice before signing, which is a protection, not a nuisance.

Prepayment penalties. These exist, and they can be significant inside a fixed term. If there's any chance you'll sell or repay early, ask for the penalty schedule in writing before you sign — or ask specifically about HomeEquity Bank's CHIP Open product, designed for borrowers who want to repay in full without penalty.

Your obligations. Property taxes current. Home insurance current. Property maintained. Fail on these and the loan can be called — the No Negative Equity Guarantee assumes you've kept your side of the bargain.

You're 70. Your detached home is worth $700,000, mortgage-free. You need cash for retirement income and a new roof.

What you get

At 70 you qualify for roughly 40% — about $280,000. Minus a $1,795 closing fee and $1,200 of appraisal and legal, you net around $277,000 tax-free. Your OAS is untouched. If you'd pulled $277,000 out of a RRIF instead, the tax bill alone would have been brutal.

What it costs — 15 years on

At 6.75% compounding, your $280,000 balance becomes roughly $746,000 by age 85. Your home, growing at 3%, is worth about $1,090,000.

Equity left for your estate: about $344,000. You started with $700,000 of it. The loan consumed roughly half of your home's total growth over fifteen years.

Now change one number

Suppose appreciation is 1%, not 3% — quite possible in a flat market. Your home is worth about $813,000 at 85 and the loan is $746,000. Equity survives, but only just — a shift toward a higher-LTV product at 7.7%, or a slightly longer stay, could easily flip this negative.

And the alternatives?

A HELOC at 6.2% on the same $280,000 costs about $1,447 a month in interest — but the balance never grows. After 15 years you still owe $280,000, not $746,000. You'd have paid roughly $260,000 in interest and preserved a large amount more equity. If you can afford $1,447 a month, this is not a close call.

Downsizing to a $450,000 condo frees about $208,000 with no debt at all — and your estate keeps the entire condo.

None of which means the reverse mortgage is wrong. If you can't afford $1,447 a month and you will not move, it may be the only answer. But now you know what it costs.

Official sources & further reading: read the government's guide at the Financial Consumer Agency of Canada, check Old Age Security and GIS rules, and track the Bank of Canada policy rate. Browse every tool on the mortgage calculators homepage.