Ever wondered if you could squeeze cash out of your house without selling it? Like breaking open a piggy bank without having to make a move. That’s the magic of a reverse mortgage, and for many Canadians over 55, it’s a game changer.

In true Weeks Group fashion, we’ll demystify the basics, weigh the pros and cons and show you how these loans can even act as a bridge when you’re buying and selling at the same time, which is a little-known hack we have used at the Weeks Group.

(Note: we’re happy, dedicated realtors, not lawyers or financial planners, so always get professional advice before signing on the dotted line.)

Do you want to stay informed about what’s happening in Simcoe County and Barrie real estate? Get the latest news and early access to our listings by subscribing to our newsletter. 

What Is a Reverse Mortgage?

What is a reverse mortgage and how does it work? A reverse mortgage lets homeowners aged 55-plus convert a portion of their home equity into tax‑free cash.

Instead of making payments to the bank every month, the bank sends money to you. You still own the home and are responsible for property taxes, insurance and upkeep.

The loan (plus accumulated interest) is typically repaid when you sell the house, move out permanently, or the last borrower dies. Most lenders will advance up to 55 % of your home’s value, some allow a bit more and there’s no income or credit check because the loan is secured by the property.

---

Curious about real estate in Barrie? Get valuable background information in the posts below:

• Barrie Luxury Real Estate Compared to Toronto
• How Does Real Estate Negotiation Work In Today’s Market? 
• Why Is It Critical to Buy and Sell a Home in the Same Market?

---

How Does It Work?

Let’s explore the pros and cons of what a reverse mortgage is and how it works. Once approved, you choose how to receive the funds: as a lump sum, in regular instalments or a combination of both.

You don’t have to make any scheduled payments, but you can chip away at the balance if you like to control how much interest accumulates. Because interest rates are higher than with a conventional mortgage or HELOC, your equity shrinks over time.

When the loan comes due, the proceeds of the sale repay the balance and any remaining equity goes to you or your estate. Are reverse mortgages a good idea? Let’s look at the reverse mortgage pros and cons.

Benefits of Reverse Mortgages

• Stay put- You access cash without having to sell, allowing you to age in place or fund renovations.
• No monthly payments– Cash flow stays flexible, which can be a lifesaver on a fixed income.
• Tax‑free funds– The money you receive isn’t taxable and doesn’t affect OAS benefits.
• Easy qualification– If you’re 55 or over and have enough equity in your principal residence, you’re most of the way there.

Disadvantages of Reverse Mortgages

• Higher interest– Rates are generally higher than regular mortgages or lines of credit, so the loan balance grows quickly.
• Reduced equity– Because you’re borrowing against your home, there may be less to leave to your heirs.
• Fees– Expect appraisal, legal and set up costs, some of which may be deducted from the advance.
• Estate timing– Your estate has a limited time to repay the loan after you pass away, which could force an expedited sale.

Reverse Mortgage vs HELOC

A traditional home equity line of credit (HELOC) is another way to unlock your home’s value. Like a reverse mortgage, it’s secured by your property, but the similarities end there.

A HELOC is a revolving credit line: you can borrow, repay and borrow again. You only pay interest on what you use, but you must make monthly interest (and sometimes principal) payments, and you’ll need to qualify based on income, credit score and a stress test. HELOC rates are typically lower than reverse mortgage rates, but missing payments can put your home at risk.

By comparison, a reverse mortgage has no required payments and you settle the balance when you sell or move. The trade-off is higher interest and diminishing equity. Which option is right depends on your cash flow, borrowing needs and comfort with monthly payments.

A Clever Twist: Reverse Mortgages as Bridge Loans

Here’s a scenario we see often: you’ve bought your downsized dream home but your existing house hasn’t sold yet. Traditional bridge loans work in this situation but require a firm sale agreement and proof of income- not ideal if you’re retired.

An open reverse mortgage, like those offered by CHIP or Equitable Bank, can fill the gap. They let you borrow against your current home for a short term (often with no penalty for early repayment) and use the funds for the down payment on your new place.

Once your old house sells, you pay off the reverse mortgage with the proceeds. It’s not for everyone, but in unique cases that we have had, it provides the breathing room you need without monthly payments.

Ready to start your home search in Barrie or Simcoe County? Start here with our featured properties.

---

Do you prefer to sell your home and downsize instead? The posts below can give you a head start:

• Checklist for Selling a House
• Riparian Rights: What to Know When Selling a Waterfront Home
• Patent Defect Vs Latent Defect: What Home Sellers Need to Know

---

Final Thoughts

Reverse mortgages are not a one-size-fits-all solution. They can unlock the equity in your home, ease cash flow and even act as a bridge between properties, but they come with higher costs and will reduce what you leave behind.

If you’re curious whether a reverse mortgage is right for you, give us a call and we’re happy to share what we’ve learned. Just remember to consult a qualified lawyer or financial professional before making a final decision. That way, your house remains both a home and a smart part of your financial plan.

Whatever your next steps may be, our Barrie real estate agents are happy to help. Reach out to us today at 705.305.4174 or email hello@weeksgroup.ca to begin a conversation.