What Adult Children Get Wrong About Reverse Mortgages in Canada

The phone call I dread most isn't from a nervous client. It's from their son. 

He's usually in his late forties, successful, well-meaning, and absolutely convinced he knows what's best for his parents. He's done twenty minutes of Google research, and he's ready to tell me why a reverse mortgage in Canada is a terrible idea. His parents — a retired couple in their early seventies, sitting on $800,000 worth of Mississauga semi-detached and quietly stressed about money — are nodding along because they don't want to cause conflict. 

I've had this conversation more times than I can count. And while I deeply respect that adult children come from a place of love, the assumptions they walk in with are often wrong in ways that genuinely hurt their parents' quality of life. So let me address the most common ones directly. 

"You're Throwing Away Our Inheritance" 

This is the big one, and I'll be honest with you — it's also the one that frustrates me most, because it centres the wrong person's interests. 

Your parents' home is their asset. They built equity in it over thirty or forty years. The question of whether to access that equity through a reverse mortgage in Canada is fundamentally their decision, not a family vote on preserving an estate. When an adult child's first instinct is to protect the inheritance rather than ask "what does Mom actually need to feel secure?", something has gotten backwards.

That said, I always explain how the numbers work, because the inheritance concern isn't irrational — it's just usually overstated. With HomeEquity Bank's CHIP Reverse Mortgage, the most widely used product in Canada, most clients access somewhere between 20% and 40% of their home's appraised value. The rest remains equity. And in markets like the GTA, Hamilton, or Ottawa, homes have historically continued to appreciate even with a reverse mortgage outstanding. I've had clients who accessed $200,000 ten years ago and whose estate — after full repayment — was still larger than it would have been if they'd sold investments to cover living expenses instead.  

"The Interest Rate is Outrageous" 

Yes, the rate on a reverse mortgage in Canada is higher than a conventional mortgage.

That's a real cost, and I never pretend otherwise. But rate comparisons only make sense if you're comparing equivalent situations — and most adult children aren't. 

The real question isn't "what's the rate?" It's "what's the after-tax, after-cost alternative?" 

I worked with a woman in Oakville — I'll call her Patricia — whose daughter was pushing hard against a reverse mortgage and instead suggested Patricia sell some of her non-registered investments to cover a $2,000 monthly shortfall. On the surface, that sounded reasonable. But Patricia's portfolio was heavily weighted in equities with significant embedded gains. Selling $24,000 a year was going to trigger capital gains tax every single year, erode her investment base faster than the interest on a reverse mortgage would, and push her income high enough to trigger OAS clawback. When we put the actual numbers side by side, the reverse mortgage in Canada was meaningfully cheaper — not because the rate was low, but because the alternatives were more expensive than they appeared. 

This is the analysis adult children almost never do. They see a rate, compare it to their own mortgage rate, and stop there. 

"Just Sell the House and Downsize" 

I hear this one constantly, and sometimes it's the right answer. But it's not the automatic answer that people assume. 

Downsizing in Ontario isn't the financial windfall it used to be. Land transfer taxes in Toronto can run $30,000 or more on a purchase. Real estate commissions, legal fees, moving costs, and potential renovation of the new property can easily consume $80,000 to $100,000 before a retiree sees a dollar of freed-up equity. And that's before we talk about what "downsizing" actually means for a 74-year-old who has lived in the same neighbourhood for thirty years — the social dislocation, the proximity to friends, the familiar doctors and routines. 

I had a client couple in Burlington — both in their mid-seventies — whose kids were adamant they should sell and move to a condo. When we mapped out the actual transaction costs plus the carrying costs of a condo (maintenance fees, property tax, the loss of the garden that kept the husband active and engaged), the financial case for moving essentially disappeared. They used a CHIP Reverse Mortgage instead, freed up enough monthly cash flow to stop the RRIF drawdown pressure they were under, and stayed in the home they loved. Three years later, they're still there. The son came around. 

What I Wish Adult Children Understood 

I'm not in the business of selling reverse mortgages to people who don't need them. Probably a third of the people I speak with end up not getting one — because downsizing genuinely makes more sense, or a HELOC is a better fit, or their cash flow situation resolves in another way. I tell people when a reverse mortgage isn't right for them, because my reputation is worth more than one transaction. 

What I am in the business of is making sure that a 72-year-old woman doesn't quietly reduce her medications because she's afraid to touch her savings, while her adult children sit comfortably in the belief that they've protected the family home. 

A reverse mortgage in Canada is not a last resort, and it's not a scam. It's a financial tool — one that fits some situations well and others poorly. The best thing an adult child can do isn't to walk into an appointment with a verdict already rendered. It's to sit down, listen to the full analysis, and then ask the most important question: "Mom, what would make you feel most secure?" 

That's the conversation worth having. 

Thinking about whether a reverse mortgage in Canada makes sense for your situation — or your parents'? I'm happy to walk through the numbers with no obligation and no pressure. Reach out and let's have an honest conversation.