Reverse mortgages: the version I tell my own family

Reverse mortgages get oversold and overhated in equal measure. The TV ads make them sound like free money. Some financial commentators talk about them like a scam. Both are wrong.

I told the Toronto Sun in February 2026 that homeowners 55+ need to be prepared as mortgage options narrow. Reverse mortgages are one option in that landscape — not the first one I recommend, not the last. Here's the version I'd give my own family.

What a reverse mortgage actually is

A reverse mortgage is a loan against your home equity, available to homeowners 55+, that doesn't require monthly payments. You borrow up to 55% of your home's value, the interest accrues against the loan balance, and the whole thing gets repaid when you sell, move out permanently, or pass away.

You still own your home. The lender doesn't take title. You can stay as long as you want, and the loan can never exceed the home's value (it's a "non-recourse" loan in Canada).

When it's the right tool

Reverse mortgages make sense for a specific shape of situation:

• House-rich, cash-poor. Significant home equity, but limited income and limited liquid savings.
• Plan to age in place. No intention of moving in the next 10+ years. The longer you stay, the more sense it makes (the early-year setup costs amortize over time).
• Family aligned on the inheritance plan. The reverse mortgage will reduce what's left to heirs. That's fine if everyone knows. It's a problem if it's a surprise.
• Alternatives have been examined. Downsizing, traditional HELOC, monthly-payment mortgage, family loan — all considered first.

When it's the wrong tool

• You're not sure how long you'll stay. If a move is plausible in the next 3-5 years, the costs of setting up a reverse usually exceed the benefit.
• You'd qualify for a traditional product. If your income supports a regular mortgage or HELOC at 5%, taking a reverse at 7-8% costs you real money.
• You haven't talked to your kids. The reverse is going to come up at the estate. Better to discuss it with the family now than have it surprise people later.
• It's a band-aid for a deeper problem. If you need a reverse to solve a recurring cash-flow issue, the reverse postpones the issue. Six years from now, you'll have less equity and the same problem.

The math nobody likes to discuss

Reverse mortgages compound. Interest accrues against the loan balance every month, and you're not paying it down. A $200,000 reverse at 7% becomes roughly $400,000 after ten years. That's just the math of compounding interest, and it's not hidden — but it's the part that surprises people when they see the loan statement five years in.

Run the projection before you sign. The lender will give you a clear amortization. Look at the balance in year 5, 10, 15. Decide whether the amount of equity that remains at each milestone is still consistent with your plan.

The two-question test I use with families

Before I help anyone proceed with a reverse mortgage application, I ask the family two questions:

1. "What problem is this solving?" If the answer is "we need monthly cash flow we don't have," that's a clear use case. If the answer is vague, we keep talking.
2. "What does this look like to your kids in 10 years?" If the kids are part of the plan and have been part of the conversation, great. If they don't know about it, we slow down and talk about whether they should.

The bottom line

A reverse mortgage is a real product for the right situation. It is not a get-rich-quick play. It is not a scam. It is a financial tool with very specific use cases — primarily a 70+ homeowner with a clear plan to age in place, family alignment, and alternatives considered. If that's you, it can be the right call. If it isn't, there are usually better tools for the job.