For BC homeowners 55 and older, both options unlock home equity. But the right choice depends on your goals, income needs, and long-term plans.
The fundamental difference between these products is who pays whom. Home equity loans require monthly payments. Reverse mortgages do not—repayment happens when you sell or leave the home.
Requires Monthly Payments
Best for: Retirees with stable income who want predictable payments and don't mind managing debt.
No Monthly Payments Required
Best for: Retirees without pension income, those who want to preserve cash flow, or those who plan to stay long-term.
Home Equity Loan (Any Age)
65%
of home value (minus existing mortgage)
Reverse Mortgage (55+)
55%
of home value at time of application
| Feature | Home Equity Loan | Reverse Mortgage |
|---|---|---|
| Minimum Age | None | 55 years old |
| Monthly Payments | Required | None required |
| Interest Rate | 6.95-11.99% | 5.99-9.95% |
| Maximum Access | Up to 80% LTV | Up to 55% of value |
| Income Requirements | Yes (must qualify) | No income check |
| Credit Requirements | Yes (affects rate) | Minimal credit check |
| Inheritance Impact | Reduces equity | Can reduce/heirs decide |
| Home Sale Required | No (when paid) | Yes (eventually) |
No, not as long as you meet basic requirements: maintain the property, pay property taxes and insurance, and keep it as your primary residence. The loan is repaid when you sell, move to long-term care, or pass away.
With reverse mortgages, your heirs can keep the home by repaying the loan (including accrued interest), or they can sell the property to repay the loan. If home values drop significantly, CHIP Home Equity Plans have a "no negative equity guarantee" protecting heirs.
Interest rates on reverse mortgages can be comparable or even lower, but setup fees are typically higher ($2,000-5,000). The "cost" depends on how long you live there. If you stay 20+ years, accumulated interest can exceed a home equity loan, but the cash flow benefits often outweigh this.
Yes, many reverse mortgages are available for strata/condo properties. The condo must meet lender requirements for the building's financial health, insurance, and age. Some lenders have restrictions on older buildings or those with significant deferred maintenance.
It's complicated. Existing home equity loans may need to be paid out when setting up a reverse mortgage. Some lenders allow keeping small HELOCs. Talk to a mortgage professional who specializes in both products to understand your options.
Our BC mortgage brokers can help you compare both options and find what works for your retirement plans.
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