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Reverse Mortgage Calculator
What a Canadian reverse mortgage advances, what the balance compounds to when nothing is paid, and the year it would overtake the value of the house.
You, and the house
- Cash to you
- $250,000
- Owed by then
- $1,470,730
- Maximum advance
- $378,400
- Loan passes the house
- Age 93
Nothing is paid, so the interest earns interest
$337,945 is advanced — the cash to you, the $85,000 mortgage cleared, and $2,945 of setup. Nothing is repaid, so all of it compounds at 7.49% semi-annually — an effective 7.630% a year — and the interest that accrues then earns interest of its own for the rest of the loan.
A reverse mortgage is a mortgage, so it compounds semi-annually like every other figure on this site. Applying the quoted rate once a year instead understates the balance — and hands the difference to the estate as equity that was never there.
The $85,000 existing mortgage is repaid out of the advance and then compounds at 7.49% alongside everything else. You stop making that payment, but the debt does not stop growing — it grows faster.
This balance overtakes the house inside a realistic lifetime. The no-negative-equity guarantee means neither you nor your estate can ever be asked for more than the house sells for — but it caps what is owed rather than preserving an inheritance, and whether anything is left rests entirely on the appreciation assumption.
If you sold in the first year the early repayment charge would be about $18,187, falling away over the first term. This product is built for someone staying put, and it charges for changing your mind.
Over 20 years this costs $860,285 more in interest than a HELOC on the same $250,000 would. That is the price of never making a payment, and it is worth knowing before deciding it is the only option.
This is a decision worth taking to somebody with no stake in the sale. Independent legal advice is required before signing — a broker conversation beforehand is not, and is worth as much.
Talk to a brokerThe balance rising against the house
At 3.0% a year the two cross in year 27, when the younger owner is 93. After that the guarantee caps what is owed, and there is nothing left to inherit.
- Value of the house
- What is owed
Where the house goes when it sells
Of the $1,986,722 it is projected to be worth in 20 years, this is what repays the money advanced, what repays the interest that accrued on it, and what reaches the people you leave it to.
- Repaying what was advanced
- $337,945
- Repaying accrued interest
- $1,132,785
- Left for the estate
- $515,992
- The house, when it sells
- $1,986,722
What the house releases
- Maximum advance34.4% of value at 66 — your co-owner’s age, being the younger
- $378,400
- Less the existing mortgageCleared from the advance before anything reaches you
- −$85,000
- Less setup costsLender fee, the appraisal, and the independent legal advice the law requires
- −$2,945
- Cash in your hand
- $250,000
What it becomes, with nothing paid
- Total advancedPayoff, costs and cash — every dollar of it compounds
- $337,945
- Compounding at7.49% compounded semi-annually, the statutory convention for a Canadian mortgage
- 7.630%
- Balance after 20 years
- $1,470,730
- Of which is interestNever paid, so it compounds on itself for the whole term
- $1,132,785
The estate question
- Home value today
- $1,100,000
- Projected value in 20 yearsAt 3.0% a year — an assumption, not a forecast
- $1,986,722
- Left for the estate
- $515,992
- Balance passes the home valueWhen the youngest owner is 93
- Year 27
- Equity at 8519 yrs from now
- $562,391
- Equity at 9024 yrs from now
- $262,422
If the market does something else
- Falling 2% a yearThe balance has passed the value of the house — the guarantee caps what is owed, and nothing is left
- $0
- 0% a yearThe balance has passed the value of the house — the guarantee caps what is owed, and nothing is left
- $0
- 2% a yearHouse worth $1,634,542, and the loan overtakes it at 88
- $163,812
- 3% a year — your assumptionHouse worth $1,986,722, and the loan overtakes it at 93
- $515,992
- 5% a yearHouse worth $2,918,627
- $1,447,897
Leaving early
- Sold in year 15% of the $363,731 balance
- $18,187
- Sold in year 24% of the $391,485 balance
- $15,659
- Sold in year 33% of the $421,356 balance
- $12,641
The same money, three other ways
- Reverse mortgageNo payment · No payment is ever required, and the balance reaches $1,470,730 by year 20. Qualification is on age and the house, not income.
- $1,132,785
- HELOC$1,135.42 a month · Interest-only on the same $250,000, up to $630,000 available. Needs provable income to qualify and the payment never stops.
- $272,500
- DownsizingNo payment · Releases the equity with no borrowing cost at all, against the cost and upheaval of moving. Frequently the cheapest answer for anyone willing to consider it.
- $0
- Conventional refinancePrincipal and interest · Much cheaper money, but it has to pass the stress test on provable income — which is exactly the wall retirement income tends to hit, and the reason this product exists.
- Below reverse pricing
What this does not cover
Each lender’s own eligibility rules beyond the reductions applied here, the tax treatment of the advance, its effect on income-tested benefits like the Guaranteed Income Supplement, and the obligation to keep the home insured, taxed and maintained for as long as the loan runs. The first is for a broker, the middle two are for an accountant, and the last is a condition of the loan rather than a detail.
A planning estimate, not an approval or an offer. The maximum advance, the rate and the fees all depend on the lender, an independent appraisal and underwriting at the time you apply. The balance compounds semi-annually, the statutory convention for a Canadian mortgage, which is why the effective rate shown is above the rate quoted. Projected home values are an assumption you set, not a forecast, and the whole estate figure moves with it — the grid runs a falling market for that reason. Maximum advances are interpolated between published age bands and then reduced for property type and market; the reductions are approximate and a specific lender will have its own. Early repayment charges vary by lender and term. Nothing here accounts for tax, for the effect on income-tested benefits, or for the requirement to keep the home insured, taxed and maintained throughout.
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What this calculator does
A reverse mortgage lets an owner aged 55 or over borrow against the house without making any payments. Interest is not paid — it is added to the balance, where it earns interest of its own. The loan comes due when the last owner sells, moves out permanently or dies.
Almost every reverse mortgage calculator answers one question: how much can I get? That is the easy half, and it is the half the lender is motivated to show you. This page answers the other one — what is left afterwards, in which year the loan overtakes the house, and how old you are when that happens.
On the figures this page opens with, the answer is a $250,000 advance today, a balance of $1,470,730 in twenty years, and $515,992 left of a house projected to be worth $1,986,722. If house prices are flat instead of rising 3% a year, the loan passes the value of the house in year 17.
- The maximum advance, by the age of the younger owner on title
- What actually reaches you after the existing mortgage and the setup costs
- A balance that compounds semi-annually, the way a Canadian mortgage does
- The year — and the age — at which the balance overtakes the house
- What the same money would cost as a HELOC, and what downsizing avoids entirely
The balance compounds semi-annually, not annually
A reverse mortgage is a mortgage. It falls under the Interest Act like any other, which means a quoted 7.49% compounds semi-annually and works out to an effective 7.6303% a year. Applying the nominal rate once a year instead is a common shortcut and it is wrong in a specific direction: it makes the balance look smaller.
On these figures that shortcut reports a balance of $1,432,872 at twenty years where the correct figure is $1,470,730. The $37,859 difference does not stay in the balance — because what is left for the estate is the house minus the loan, the shortcut hands that same $37,859 to the family as equity that was never there.
The gap widens the longer the projection runs, because it is compounding on compounding. At thirty-five years it is more than $90,000. On a product whose entire risk is that the balance grows quietly for decades, getting the compounding convention right is not a technicality.
- 7.49% quoted compounds to an effective 7.6303% a year
- Correct balance at twenty years: $1,470,730
- Compounded annually instead: $1,432,872 — $37,859 too low
- And the estate is overstated by exactly that same $37,859
- At thirty-five years the error passes $90,000
The year the loan passes the house
The no-negative-equity guarantee is the reassurance every reverse mortgage brochure leads with, and it is real: neither you nor your estate can ever be asked for more than the house sells for. It is also not the answer to the question families are actually asking, which is when there stops being anything to inherit.
Those are different dates and only one of them is on most calculators. On the default figures, at 3% appreciation, the balance passes the value of the house in year 27 — when the younger owner is 93. At flat prices it happens in year 17, at 83. In a market falling 2% a year, sooner still.
This is the number to take to a family conversation. Not the percentage available today, and not a footnote about a guarantee — the age at which the arithmetic runs out.
- At 3% appreciation: year 27, at age 93
- At flat prices: year 17, at age 83
- In a falling market, earlier again
- The guarantee caps what is owed; it does not preserve an inheritance
- These are two different questions and both deserve an answer
The younger owner on title governs
Where two people own the home, the maximum advance is set by the younger of the two ages — not the older, and not an average. The loan cannot be called while either owner still lives there, so the lender prices the longer of the two horizons.
The default file here is a 68-year-old with a 66-year-old co-owner, and it is the 66-year-old who governs: 34.4% of value rather than the 37.2% the older age alone would give. On an $1,100,000 home that is $30,800 less available, purely from a field it is easy to leave blank.
It is worth entering both ages honestly before building any plan on the number. A calculator that asks for one age is quietly answering a different question than the lender will.
- The younger owner sets the maximum, always
- Here 66 governs over 68 — 34.4% of value instead of 37.2%
- Worth $30,800 of available advance on this house
- Because the loan cannot come due while either owner remains
- Enter both ages, or the figure will be too high
Not every house gets the full percentage
The age-based percentage is a starting point, not a promise. Lenders advance most freely against a detached house in a large market and trim from there — a condo is slower to sell and harder to value, and a smaller market has fewer buyers and fewer participating lenders.
This page applies those reductions rather than mentioning them in a tooltip and then ignoring them. A condo is trimmed by a tenth, a market outside the largest centres by a twentieth, and the two compose. The trims are proportional to the age-based percentage, not points subtracted from it, which is a materially different number.
They are also the reason a figure from a national calculator can be tens of thousands of dollars above what a specific lender will actually advance against a specific building.
- Detached in a major market gets the full age-based percentage
- A condo is trimmed a tenth; a smaller market a further twentieth
- Trims are proportional, not points off the percentage
- On this house a condo is $37,840 less available
- Property type and location genuinely move the answer here
Taking it slowly is the biggest lever you have
The balance only compounds on money you have actually taken. A dollar drawn in year eight has eight fewer years to grow than a dollar drawn on day one, and on a product with no payments that difference is most of what you control.
Taking the same $250,000 as monthly advances over ten years instead of a lump sum leaves $319,990 more at the twenty-year mark on these figures. The advance is identical, the rate is identical, and the cash still reaches you — only the timing changes.
The existing mortgage payoff and the setup costs cannot be spread; they are needed on day one and they compound from day one. But the cash to you can be, and drawing only what you need when you need it is worth more than shopping for a slightly better rate.
- Money drawn later compounds for fewer years
- Spreading the same $250,000 over ten years leaves $319,990 more
- Same advance, same rate, same cash — different timing
- The mortgage payoff and the fees cannot be spread
- This is a larger lever than the interest rate
What the same money costs another way
A HELOC on the same $250,000 costs $272,500 in interest over twenty years, paid monthly as you go. This reverse mortgage accrues $1,132,785 over the same period — a difference of $860,285. That is what never making a payment costs, compounded.
The comparison is not an argument against the product. A HELOC requires provable income to qualify and a payment every month for as long as you hold it, and for a retired household one or both of those is frequently impossible. That gap is precisely what a reverse mortgage exists to fill.
But the comparison should be made rather than assumed. Downsizing releases the equity with no borrowing cost at all, and a conventional refinance is far cheaper money for anyone who can pass the stress test on retirement income. A reverse mortgage suits a narrow situation genuinely well: you want to stay in this house, you cannot service a payment, and leaving the maximum possible estate is not the first priority.
- HELOC on the same draw: $272,500 of interest over twenty years
- This reverse mortgage: $1,132,785 accrued over the same twenty years
- A difference of $860,285 — the price of making no payments
- But a HELOC needs provable income and a payment every month
- Downsizing borrows nothing; a refinance is cheaper if you can qualify
The costs of starting, and of changing your mind
Setting one up costs $2,945 here — the lender fee, the appraisal, and the independent legal advice that is mandatory rather than optional in Canada. All of it is drawn from the advance and all of it compounds from day one alongside everything else.
Leaving early is expensive. Sold in the first year, the early repayment charge on these figures is about $18,187, falling away across the first term. The product is built for someone who intends to stay, and it prices the possibility that you will not.
The mandatory legal advice is worth treating as a feature rather than a hurdle. It exists so that somebody with no stake in the sale walks you and your family through exactly the arithmetic on this page before anything is signed.
- Setup here is $2,945, drawn from the advance and compounding with it
- Independent legal advice is required by law, not optional
- Selling in year one costs roughly $18,187 in early repayment charges
- The charge falls away over the first term
- You must also keep the home insured, taxed and maintained throughout
Using your results well
Look at the appreciation grid before anything else, and specifically at the falling-market row. A projection that only works if house prices rise is not a projection, and the one scenario in which this decision goes badly is the one most calculators leave out.
Then run your realistic horizon rather than a round twenty years, and check the equity figures at 85 and at 90 — those are the ages a family conversation actually turns on. If you are an adult child helping a parent think this through, those two numbers and the crossover age are the whole discussion.
Finally, draw less than the maximum and take it over time if you possibly can. Nothing else you decide here — not the lender, not a quarter point on the rate — moves the outcome as much.
- Read the falling-market row before the optimistic one
- Use your real time horizon, not a round number
- Take the equity figures at 85 and 90 to the family conversation
- Draw the minimum you need, as late as you can
- Compare a HELOC and downsizing before concluding this is the only route
Common questions
How much can I get from a reverse mortgage in Canada?
Roughly 20% of the value of the home at 55, rising toward about 55% at the oldest ages, based on the age of the youngest owner on title. On the default figures here — a 66-year-old co-owner and an $1,100,000 detached home in Toronto — the maximum is 34.4% of value, or $378,400. A condo or a smaller market reduces it. The existing mortgage and the setup costs come out of that before any cash reaches you.
Will the balance ever be more than my house is worth?
On paper, very likely, if you live long enough. On these figures at 3% appreciation the balance passes the value of the house in year 27, when the younger owner is 93; at flat prices it happens in year 17, at 83. Canadian reverse mortgages carry a no-negative-equity guarantee, so neither you nor your estate can ever be asked for more than the house sells for. What the guarantee does not do is preserve an inheritance — past that crossover point there is simply nothing left. Confirm the guarantee in writing with the specific lender.
Why does my spouse’s age change how much I can borrow?
Because the loan cannot be called while either owner still lives in the home, so the lender prices the longer horizon — which means the younger age governs. On the default file a 66-year-old co-owner sets the maximum at 34.4% of value where the 68-year-old alone would have given 37.2%. That is $30,800 less on this house. Enter both ages, or the figure you are planning around is too high.
Do I have to make any payments?
No, and that is the entire point of the product. But nothing being paid is also why the balance grows rather than shrinks: interest is added to the balance and then earns interest itself. On these figures $1,132,785 of the $1,470,730 owed at twenty years is accrued interest rather than money you received.
Is a reverse mortgage or a HELOC better?
A HELOC is far cheaper — $272,500 of interest over twenty years on the same $250,000, against $1,132,785 here. It also requires provable income to qualify and a payment every single month, which for many retired households is the reason it is not available. A reverse mortgage exists for that specific situation: staying in the home, unable to service a payment, and not primarily optimising the estate. Compare both properly before assuming.
Does it matter how I take the money?
More than almost anything else you control. Interest only accrues on what you have actually drawn, so money taken later compounds for fewer years. Taking the same $250,000 as monthly advances over ten years rather than all at once leaves $319,990 more at the twenty-year mark on these figures — same advance, same rate, same cash in hand, different timing.
What happens when the last owner dies?
The loan becomes due, usually within a defined window, and is normally repaid by selling the home. Whatever remains after the balance is cleared goes to the estate — which is the "left for the estate" figure this page projects. The estate can also repay the loan from other funds and keep the house.
What does it cost to set up, and to get out early?
Setup here is $2,945 — the lender fee, the appraisal and the mandatory independent legal advice — all drawn from the advance and compounding with it. Getting out early is priced separately: selling in year one costs roughly $18,187 on these figures, falling away over the first term. The product suits someone staying put and charges for changing your mind.
Next step
This is worth a second opinion before it is signed.
Independent legal advice is required before a reverse mortgage is signed in Canada, and it exists precisely so somebody with no stake in the sale explains the arithmetic on this page. A broker conversation beforehand is not required and is worth as much — a HELOC, a refinance or downsizing may cost a great deal less. Mortgage Directory lists licensed brokers across Canada — placement is never sold, and an enquiry goes to one broker only.