Reverse mortgage rates have dropped to 6.44% in Canada — what homeowners 55+ need to know now

Unfortunately, the reverse mortgage product carries a stigma — one of predatory lending to unaware seniors. But the Canadian market has shifted meaningfully and these days more people are aware of the benefits and risks attached to a reverse mortgage. Combine this with lower rates and more competition in this non-traditional loan space and the number of Canadians now turning to a reverse mortgage as a retirement option has grown.

Here’s how to determine if a reverse mortgage is right for you.

What is a reverse mortgage and how does it work?

A reverse mortgage works like a standard mortgage, but in reverse: The lender gives you money against your home's equity, and interest accumulates over time rather than being paid monthly.

What’s key is that you, the homeowner, retain title and ownership your home and no one can force you to move or sell, until you’re ready.

To qualify, you must be at least 55 years old, own a home that is your primary residence, have the home appraised, and carry no existing mortgage. (Some reverse mortgage lenders will also allow you to use proceeds from the reverse mortgage to pay off an existing mortgage — allowing you to retire without making monthly mortgage payments.) In most cases, no income verification or minimum credit score is required to apply and be approved for a reverse mortgage.

How much home can you afford?

Whether you're hunting for a new home or looking to refinance your mortgage, knowing how much your new loan might cost you is critical. Use our handy mortgage calculator to help you understand what your payments could look like.

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How much can you borrow with a reverse mortgage?

In most cases, lenders in Canada allow you to borrow up to 55% of your home's appraised value — a limit that is established and enforced by the Office of the Superintendent of Financial Institutions' (OSFI) Guideline B-20 (1). Some lenders and products can extend the borrowing limit to 59% for older borrowers in desirable markets.

You can receive funds as a lump sum, in regular installments or as a combination of both.

The loan is repaid — principal plus all accrued interest — when you sell, move out or die. Any remaining equity goes to you or your estate.

What rates do you pay with a reverse mortgage?

Expect to pay more than you would on a traditional mortgage — but meaningfully less for the same product compared to a few years ago when borrowers were paying between 7% and 10% interest on their reverse mortgage equity loan.

More competition in this space along with Bank of Canada rate cuts means costs on reverse mortgages have come down. Now, homeowners can find reverse mortgage products with interest rates as low as 6.44%, not including application and administrative fees (2).

For instance, HomeEquity Bank, the operator of CHIP Reverse Mortgage, currently offers a 5-year fixed rate at 6.64%, which works out to an APR of 7.06% after factoring in closing costs and administrative fees (3). Equitable Bank's Flex Lite product starts at 6.44% for a 5-year fixed term, though that rate applies to lump-sum borrowers only, with a maximum loan-to-value (LTV) of 40%. Its more flexible Flex product — which allows scheduled and ad-hoc advances up to 55% LTV — carries a 5-year fixed rate of 6.54% (4).

For borrowers who want rate certainty for the life of the loan, Bloom Finance introduced Canada's first lifetime fixed-rate reverse mortgage in November 2025, at 6.69% — eliminating renewal risk entirely (5).

As a general rule, the more you borrow relative to your home's value, the higher the rate. Older borrowers accessing larger LTV products — such as Equitable Bank's Flex PLUS, designed for borrowers aged 70 and older — will see rates starting at 7.69% for a 5-year fixed term (6).

Consider all costs when selecting a reverse mortgage product

Interest rates matter most, because they compound over time, but additional fees can add up making an advertised low rate not as attractive.

Interest rates

For instance, if you took out a reverse mortgage on a $170,000 loan, the difference between 6.5% and 8% compounded over 10 years adds up to tens of thousands of dollars in accrued interest before repayment.

Administrative fees

Setup fees vary by lender. For instance, HomeEquity Bank charges $1,795 for standard terms, while Equitable Bank and Home Trust both charge $995.

Appraisal fees

All lenders require an independent appraisal on your home — at a cost of $300 to $600 out of your pocket. Plus, you’ll need to pay independent legal advice before closing.

Total extra cost

Generally, expect to pay $1,500 to $3,500 for these appraisal fee and administrative costs, although these costs can climb depending on the lender, term and province.

Prepayment costs

Prepayment penalties are another consideration. Reverse mortgages are designed to remain in place until the home is sold — paying down or closing the balance early can be expensive. Some lenders offer provisions to avoid this fee. For instance, Bloom Finance's SafeRate includes a fee waiver within three years of the first homeowner's death or if the last surviving borrower enters long-term care.

Is a reverse mortgage a good idea for you?

It depends on your situation, your timeline and what alternatives exist.

A reverse mortgage may make sense if you want to stay in your home, your cash flow needs are ongoing rather than one-time, and you've exhausted or ruled out other options — like a mortgage refinance, home equity line of credit (HELOC), downsizing or tapping registered retirement savings.

A reverse mortgage may be a poor fit if you plan to move within a few years (transaction costs could erode the value quickly), if preserving equity for heirs is a priority or if you can meet your needs through other means at a lower cost.