Reverse mortgage in Canada or a private mortgage: which fits if you are 55 or older?
For most retirees a reverse mortgage or a sale beats a private mortgage. Private money is a short bridge, not a retirement plan.
Written and reviewed by Asim Ali, Mortgage BrokerUpdated 5 November 2026
Licensed: BCFSA (BC) · RECA (Alberta) · FSRA (Ontario) · check our licences
If you are 55 or older, own your home and have little income, a reverse mortgage or downsizing usually beats a private mortgage. A reverse mortgage from HomeEquity Bank (CHIP), Equitable Bank or Bloom Finance lends up to 55% of your home's value. You make no monthly payments. Fixed rates ran 6.28% to 7.59% in October 2026, from 6-month to 5-year terms. A private mortgage costs 7.49-10.99% interest-only plus 2-4% in fees, and must be repaid in 6-12 months. Use it only as a short bridge, for example until your home sells.
What is a reverse mortgage in Canada?
A reverse mortgage is a loan against your home for owners aged 55 and older. You make no payments. Interest is added to the balance instead. You repay when you sell, move out, or the last borrower dies.
Three lenders offer them in November 2026: HomeEquity Bank (the CHIP Reverse Mortgage), Equitable Bank and Bloom Finance. Every owner on title must be 55 or older. You can borrow up to 55% of the home's value. Your age, your city and the type of home set your real limit. A 60-year-old gets less than an 80-year-old. Most lenders want a home worth at least $200,000 to $250,000.
No income test applies. That is why a reverse mortgage works when a bank says no to a HELOC. Lenders also promise you will not owe more than the home is worth, as long as you pay your property tax and insurance and keep the home in good repair.
Reverse mortgage vs private mortgage vs HELOC vs downsizing
The reverse mortgage wins on payments. The HELOC wins on cost, if you qualify. Downsizing wins on debt. The private mortgage wins only on speed.
| Reverse mortgage | Private mortgage | HELOC | Downsizing | |
|---|---|---|---|---|
| Who qualifies | Owners 55+; no income test | Equity; credit matters little | Income, good credit, stress test | Anyone who can sell |
| Most you can get | Up to 55% of value | Up to 75% of value | Up to 65% of value | Your equity, less costs |
| Rate | 6.28-7.59% fixed, 6-month to 5-year | 7.49-10.99% interest-only, 6-12 months | Variable, based on prime | None |
| Monthly payment | None | Interest every month | Interest at least | None |
| Upfront fees | About $1,795 closing (CHIP), plus appraisal and legal advice | 1-2% lender + 1-2% broker + legal | Low | Commission, legal, moving, transfer tax |
| When it ends | When you sell, move or die | 6-12 months, then a new fee | Open; bank can cut the limit | Done at closing |
| Best for | Staying home for years | A short bridge to a sale | Owners with steady pension income | Owners ready to move |
Reverse mortgage rates from NerdWallet Canada's lender tables, labelled October 2026. Posted rates change often; check the lender's rate sheet. HELOC limit per OSFI Guideline B-20. Private rates are our November 2026 range.
Worked example: $150,000 three ways
Illustrative example. A 70-year-old owner in Surrey, BC. The home is worth $1,100,000 with no mortgage. Pension income is $3,200 a month. The bank refused a HELOC. They need $150,000 to clear a line of credit and a CRA balance.
| Private first mortgage | Reverse mortgage | Downsize to a $750,000 condo | |
|---|---|---|---|
| Rate and term | 8.49%, 12 months, interest-only | 6.99%, 5-year fixed | None |
| Monthly payment | $1,061 | $0 | $0 |
| Upfront costs | $6,500 (1.5% lender, 1.5% broker, $2,000 legal and appraisal) | About $1,795 plus appraisal and legal advice | About $50,000 (commission, BC property transfer tax, legal, moving) |
| Cost or balance later | $19,235 paid over 12 months; $150,000 still owed | Balance about $211,500 after 5 years; $298,200 after 10 | About $300,000 cash left, no debt |
| APR | About 13.1% | Close to the rate; fees are small next to a long term | n/a |
Reverse mortgage balance assumes 6.99% compounded semi-annually and no repayments. The downsizing line assumes a $1,100,000 sale and a $750,000 purchase. Your own numbers will differ.
The private mortgage costs $1,061 a month on a $3,200 pension. In 12 months the full $150,000 is still owed. The reverse mortgage costs nothing monthly, but the balance grows. After 10 years it nearly doubles. That eats into what your heirs receive. Downsizing clears the debt and leaves cash, but you move.
Why most retirees should not take a private mortgage
A private lender lends on equity, not income. That sounds like a fit at 70. It usually is not, for three reasons.
- You pay every month. Interest-only payments still come out of a fixed pension.
- The term is short. At 6-12 months it ends. Renewal is not promised and usually costs another 1-2% fee.
- A missed payment moves fast. Power of sale in Ontario, or foreclosure in BC and Alberta, can start within months. A reverse mortgage has no payment to miss. How foreclosure works.
When a private mortgage does make sense after 55
Use private money when you have a clear exit within a year. These are the common cases.
Buying before you sell
You found the condo. The house is not sold yet. A private bridge for 3-6 months closes the purchase. The sale pays it out. Bridge loans.
A sale on your own terms
A lender has started power of sale or foreclosure. A private first pays it out and buys time to list at full market value.
Mortgage too big for a reverse
You owe 60% of the value. A reverse mortgage caps out near 55%. A private loan bridges until the home sells.
Repairs before listing
The home needs a roof or paint to sell well. Six months of private money can return more than it costs. Plan the exit first.
Refused a HELOC? Check these first
A refused HELOC is not the end. Ask these in order. Could a co-borrower with income join the application? Would a B-lender, at 6.0-8.5% plus about a 1% fee, look at your full pension, CPP, OAS and RRIF income? Would a reverse mortgage cover the need? Only then look at a private loan, and only with a written exit plan.
Before you sign a reverse mortgage: ask about prepayment penalties in the first 3-5 years. Ask how much you can prepay each year without one; 10% is common. Get independent legal advice. Talk to your family about the estate.
Reverse mortgage questions
What is the minimum age for a reverse mortgage in Canada?
55. Every owner on title must be 55 or older, including a spouse. The older the youngest owner is, the more you can borrow.
How much can I borrow with a reverse mortgage?
Up to 55% of your home's value. The real figure depends on your age, where you live and the type of home. A detached house in a big city usually gets more than a rural home or small condo.
Can I get a reverse mortgage if I still have a mortgage?
Yes, if the reverse mortgage is big enough to pay it off. The existing mortgage is paid out first from the proceeds. If you owe more than the reverse limit, you need to pay it down or sell.
What are the downsides of a reverse mortgage?
Rates are higher than a bank mortgage. Interest compounds, so the balance grows fast. Breaking it early can cost a penalty. Less equity is left for your estate.
Can a senior with no income get a private mortgage?
Yes. Private lenders lend on equity, usually up to 75% of value. But you still pay interest every month and must repay in 6-12 months. It only makes sense with a sale or refinance lined up.
Is a reverse mortgage cheaper than a HELOC?
No. A HELOC is usually cheaper if you qualify. The reverse mortgage costs more but needs no income and no monthly payment. That is the trade.
Sources. HomeEquity Bank, CHIP Reverse Mortgage fact sheet (age 55+, up to 55% of value) · NerdWallet Canada, reverse mortgages in BC and Ontario (lender rate tables labelled October 2026; CHIP closing costs $1,795; 10% annual prepayment) · Equitable Bank, reverse mortgage FAQ and comparison page · Fintech.ca, Bloom Finance launches SafeRate lifetime fixed-rate reverse mortgage, 10 November 2025 · OSFI Guideline B-20 (HELOC 65% limit) · BC Ministry of Finance, property transfer tax rates · Private Mortgage Desk rate sheet, November 2026.
Talk it through with a licensed broker before you decide
Tell us what is going on in a few lines. We call you back the same day with what lenders will say, what it costs in dollars, and how you get back to a bank. If private is the wrong tool, we say so.
- Your full cost, in dollars, before you commit
- The lender named on your commitment letter
- A written plan to exit within 12-24 months
Asim Ali, Mortgage BrokerSurrey office · BC, Alberta and Ontario
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Asim Ali, Mortgage Broker
Licensed in BC, Alberta and Ontario · (604) 591-3590