A reverse mortgage generally requires no regular payment but grows over time, while a HELOC requires qualification and at least interest payments; compare cash flow, rate, fees and estate impact.
Four points to remember
- A reverse mortgage usually has no scheduled regular payment, so interest is added to the balance.
- A HELOC is revolving credit with qualification, variable-rate exposure and required minimum payments.
- Reverse-mortgage rates and fees are usually higher than standard mortgages or HELOCs.
- The choice can affect future financing, sale proceeds and the estate.
Compare how cash is received and repaid
A HELOC allows borrowing, repayment and reuse up to a limit. A reverse mortgage may provide a lump sum or scheduled advances and is generally repaid after sale, move-out, death or default under the contract.
- Lump sum or staged advances
- Regular payment requirement
- Repayment events
Check qualification and available amount
HELOC approval considers income, credit, stress testing and equity. Reverse-mortgage amounts depend heavily on age, property, appraisal and lender policy, with the principal residence normally used as security.
- Borrower age and title
- Property type and value
- Existing mortgage and secured debt
Model the balance over time
Because reverse-mortgage interest is added to the loan, the balance can grow and home equity can shrink. Model several time horizons rather than looking only at the first advance.
- Five-, ten- and fifteen-year balances
- Rate-change scenarios
- Sale proceeds after repayment
Include family, estate and legal planning
Discuss the purpose of the funds, other retirement resources, property maintenance and repayment deadlines. Independent legal and financial advice can help the homeowner and family understand the trade-offs.
- Impact on beneficiaries
- Future move or care needs
- Contract default conditions
Frequently asked questions
Do I make monthly payments on a reverse mortgage?
Regular payments are generally not required, but interest accumulates and the contract sets repayment and default conditions.
Does reverse-mortgage money affect OAS or GIS?
FCAC states that borrowed reverse-mortgage funds generally do not affect OAS or GIS, but individual tax and benefit questions should be verified.
Can I keep my existing HELOC with a reverse mortgage?
The reverse lender may require existing secured loans, including a mortgage or HELOC, to be paid and closed. Confirm lender conditions.
Official sources and verification
This guide prioritizes primary information from governments, regulators and CMHC. Mortgage policies change; confirm the rules that apply when you apply.
This guide and its calculators are for general education only—not an approval, commitment, or legal, tax or investment advice. Actual rates, fees, underwriting and product terms vary by lender and application.