Reverse Mortgages in Toronto & the GTA for Homeowners 55+

What is a reverse mortgage?

A reverse mortgage is a loan secured by your home that's designed for homeowners 55 and older. Instead of you paying the lender every month, the lender advances you money, as a lump sum, in scheduled advances, or both. You keep ownership of your home and keep living in it. No regular payments are required. The interest is added to what you owe, and the full balance is repaid when you sell, move out, or the last borrower passes away.

The money you receive isn't taxable income, and according to the Financial Consumer Agency of Canada it doesn't affect your Old Age Security (OAS) or Guaranteed Income Supplement (GIS).

How much can you borrow?

Most reverse mortgages in Canada let you borrow up to about 55% of your home's current appraised value. The exact amount depends on:

• your age, and the age of everyone on title (older usually means more)
• your home's appraised value, type and condition
• where the home is (lenders prefer large towns and cities)
• the lender and product

If you still have a mortgage or HELOC, it has to be paid off first, usually with the reverse mortgage funds. What's left is yours to use.

Who it's for

A reverse mortgage can make sense if you are:

• 55 or older (and so is everyone on title), living in the home as your main residence
• "house-rich, cash-poor": a lot of equity, but not much monthly income
• wanting to stay in your home instead of downsizing
• unable to qualify for, or unwilling to carry, monthly payments on a HELOC or refinance
• looking to pay off an existing mortgage or debt to free up monthly cash flow
• wanting to help children or grandchildren with a down payment now, while you're here to see it
• planning renovations, home care or accessibility upgrades so you can age in place

It's usually not the right fit if you plan to move within a few years, want to keep as much equity as possible for your estate, or can comfortably handle a HELOC or refinance payment.

Pros and cons

What does a reverse mortgage cost?

Reverse mortgage rates change often and vary by lender, term and product, so we don't post them here. Rates are subject to change and are only confirmed in your lender's commitment. In general, expect:

• an interest rate higher than a standard mortgage or HELOC, with interest added to the balance
• a home appraisal
• lender set-up or closing fees
• legal fees, including independent legal advice (required in Ontario, see below)
• prepayment charges if you pay the loan off early

We give you every fee in writing before you sign, along with a projection of how your balance and remaining equity may change over time.

Independent legal advice is required in Ontario

Under Ontario's mortgage brokerage rules (O. Reg. 188/08, s. 29), a brokerage can't arrange a reverse mortgage until you give it a written statement, signed by a lawyer, confirming that the lawyer has given you independent legal advice. This protects you. Your own lawyer explains the terms, costs and impact on your estate before you sign. We encourage you to bring family into the conversation too.

Alternatives we'll compare for you

A reverse mortgage is one tool. As an independent brokerage working with 30+ lenders, we put it side by side with:

• HELOC (home equity line of credit): usually a lower rate and you only pay interest on what you use, but you need income and credit to qualify and you make monthly payments. See Home Equity Loans & HELOCs and our post Reverse Mortgage vs HELOC in Ontario.
• Refinance: replace your mortgage with a larger one, up to 80% of your home's value. Usually a lower rate, but you need to qualify for the payment. See Refinance & Debt Consolidation.
• Second mortgage or private mortgage: short-term options when you need funds quickly or don't fit bank rules. Usually a higher cost, with a clear exit plan. See Second Mortgages and Private Mortgages.
• Downsizing or selling: sometimes the simplest answer, and we'll tell you if that's the case.

How it works with Choice Financial

Why Choice Financial

Choice Financial Corp. is an independent mortgage brokerage in North York (FSRA #13564), founded in 2018. Principal Broker Greg Kalanjian (Lic. M16000014), a 5x award-winning Toronto & GTA mortgage broker, leads a team of 20+ licensed brokers and agents. Our team includes agents who focus on reverse mortgages. We're not tied to one lender. Our job is to show you every realistic option, including the ones that aren't a reverse mortgage.

Meet our team