Why I Tell Most Clients Not to Get a Reverse Mortgage

If you came to this page expecting a sales pitch, I'm about to disappoint you. 

After fifteen years working with Canadian homeowners on reverse mortgages, I've developed a reputation in my market for something that might seem strange for someone in this business: I talk people out of reverse mortgages more often than I talk them into one. Roughly a third to half of the people who sit across from me — people who came in convinced a CHIP Reverse Mortgage was exactly what they needed — leave with a different plan. 

I'm telling you this upfront because I think it matters. If you're researching a reverse mortgage in Canada, the most useful thing I can offer you isn't a glossy explanation of how it works. It's an honest account of when it doesn't make sense — and why I'll tell you so directly.  

When the Math Doesn't Justify It 

The single most common situation where I steer people away is when the amount they need to access is relatively small and their timeline is short. 

A reverse mortgage in Canada carries higher interest than a conventional mortgage or a HELOC, and that interest compounds over time. If you're accessing $50,000 to cover a kitchen renovation and you expect to sell the home within three to five years, the cost of that money — relative to alternatives — is high. A HELOC, if you can qualify for one, will almost always be cheaper over a short horizon. Even a personal line of credit, in some cases, makes more sense.

The reverse mortgage math starts to work in your favour when you're planning to stay in the home for a meaningful stretch of time, when the cash flow relief is ongoing rather than one-time, and when the alternatives — selling investments, drawing down RRSPs or RRIFs early, carrying payment-based debt — have real costs of their own. When those conditions aren't present, I say so. 

When Downsizing is Genuinely the Better Answer 

I said in another post that downsizing isn't the automatic win that adult children often assume.

That's true. But sometimes it really is the right move, and I'd rather help a client see that clearly than put them into a product that delays an inevitable and beneficial transition. 

I worked with a widower in his early eighties — I'll call him Frank — who had a four-bedroom home in Guelph that he was rattling around in alone. The house needed a new roof, the yard had become unmanageable, and his closest friends had moved to a retirement community twenty minutes away. His daughter had suggested a reverse mortgage to cover ongoing maintenance costs and property taxes. When I sat with Frank and really talked through his life, it became clear that the house itself had become a burden, not an anchor. The reverse mortgage in Canada would have funded another few years of a living situation that wasn't actually making him happy. 

Frank sold. He moved into a smaller unit near his friends. He ended up with more money, less stress, and a social life he hadn't had in years. That outcome never would have happened if I'd simply processed his application and moved on. 

The point isn't that downsizing is better than a reverse mortgage in Canada — it's that the right answer depends on what someone actually wants from the next chapter of their life. That's a conversation, not a transaction. 

When Family Dynamics Make It the Wrong Tool 

This one is harder to talk about, but it comes up more than people might expect. 

Occasionally, I meet with someone whose interest in a reverse mortgage isn't really about their own financial needs. It's about a family situation — a child who needs money, a sibling dispute, a gift they feel pressured to make. A reverse mortgage is sometimes floated as a way to extract equity from a parent's home to solve someone else's problem. 

I'm careful in these situations. Not judgmental — families are complicated, and love expresses itself in complicated ways. But a reverse mortgage in Canada is a long-term commitment secured against someone's home, and the decision needs to come from a clear-headed assessment of that person's own retirement security, not from external pressure. When I sense that isn't the case, I slow things down. Sometimes I'll suggest we bring a financial planner or a trusted family friend into the conversation. Occasionally,

I've simply told someone I wasn't comfortable proceeding.

This isn't the kind of thing you'll read in most reverse mortgage marketing, but I think it's worth saying plainly. 

When There's a Better Sequencing of Assets 

One of the most underappreciated issues in Canadian retirement planning is the order in which people draw down their assets. Draw from the wrong bucket at the wrong time, and you trigger unnecessary tax, accelerate OAS clawback, or deplete investments that would have compounded meaningfully if left alone. 

Sometimes people come to me thinking they need home equity when what they actually need is a better withdrawal strategy. If someone has TFSA room they haven't used, or a spouse with lower income who should be drawing first, or non-registered investments that could be structured differently — a conversation with a good fee-only financial planner may accomplish more than a reverse mortgage in Canada ever could. 

I'm not a financial planner, and I don't pretend to be. But I've learned enough over fifteen years to recognize when someone should be having that conversation before they have mine. And I'll tell them so. 

So, When Does a Reverse Mortgage Actually Make Sense? 

After all of that, you might be wondering why I'm in this business at all. 

The honest answer is that for a specific group of Canadians — typically homeowners in their late sixties or seventies, with significant home equity, limited liquid assets, ongoing cash flow pressure, and a genuine desire to stay in their home — a reverse mortgage in Canada is one of the most elegant financial solutions available. It eliminates monthly payments, provides tax-free cash, doesn't affect CPP or OAS eligibility, and lets someone stay in the place they've built their life around. 

When all of those conditions line up, the difference it makes in someone's day-to-day life is real and meaningful. I've seen it hundreds of times. That's why I keep doing this work. 

But I've never believed that a tool being good in the right circumstances means it's good in all circumstances. My job — the way I've always understood it — is to figure out which situation you're actually in and tell you the truth about what I find. 

If you'd like to have that conversation, I'm here for it. 

Curious whether a reverse mortgage in Canada fits your situation — or whether something else makes more sense? Let's talk it through. No obligation, no pressure, just an honest look at your numbers.