Millions of Canadian homeowners over 55 are “house-rich, cash-poor” — holding substantial home equity but limited liquid income during retirement. A reverse mortgage offers one solution: tax-free access to home equity with no monthly payments required. In 2026, reverse mortgages are a growing product category in Canada — but they come with costs and trade-offs that every homeowner should understand before signing.
What Is a Reverse Mortgage?
A reverse mortgage allows homeowners aged 55+ to borrow against their home equity without making regular payments. Interest accrues and is added to the loan balance. The mortgage is repaid only when you sell the property, move into long-term care, or pass away. The amount you can borrow depends on your age, property value, and location — typically up to 55% of the home’s appraised value.
In Canada, the two primary reverse mortgage providers are HomEquity Bank (the CHIP Reverse Mortgage) and Equitable Bank (the EQ Bank Reverse Mortgage). Both are federally regulated.
Reverse Mortgage Rates in 2026
| Product | Rate Type | Rate (Q1 2026) | vs. Standard Mortgage |
|---|---|---|---|
| CHIP 5-Year Fixed | Fixed | ~6.89% | +2.9% premium |
| CHIP Variable | Variable | ~6.59% | +2.1% premium |
| EQ Bank Reverse | Fixed/Variable | ~6.49%+ | +2.0%+ premium |
The True Cost of Compounding Interest
Because no payments are made, interest compounds on the outstanding balance annually. This erodes equity faster than most homeowners anticipate:
| Initial Loan | Rate | Balance After 5 Years | Balance After 10 Years |
|---|---|---|---|
| $200,000 | 6.89% | $280,000 | $392,000 |
| $350,000 | 6.89% | $490,000 | $686,000 |
Reverse Mortgage vs. HELOC: Key Differences
| Factor | Reverse Mortgage | HELOC |
|---|---|---|
| Monthly payments | None required | Interest-only minimum |
| Income requirement | None — equity-based | Must qualify on income |
| Interest rate | 6.49%–7.00%+ | Prime + 0.50% (~5.70%) |
| Best for | Fixed-income retirees, no income to qualify | Retirees with pension income; lower cost |
Compare reverse mortgage and HELOC options for Canadian homeowners at mrates.ca.