A reverse mortgage is one option — but it's not the only one. Here's an honest comparison of the most common ways to access your home equity in retirement.
| Reverse Mortgage | HELOC | Downsizing | |
|---|---|---|---|
| Monthly payments | None required | Interest-only minimum | N/A |
| Stay in your home | Yes | Yes | No |
| Income required | No | Yes | No |
| Credit required | Minimal | Yes | No |
| Interest rate | Higher (~6.5%) | Lower (~5-5.5%) | N/A |
| Affects gov't benefits | No | No | Possibly |
| Can lender call the loan | No | Yes | N/A |
| Estate impact | Reduces equity over time | Balance due on sale | Frees up capital |
Home Equity Line of Credit (HELOC)
A HELOC is typically the lower-cost option. Rates are lower, and you only pay interest on what you draw. However, HELOCs require income qualification, demand monthly interest payments, and can be called by the lender at any time. If your income drops in retirement, maintaining HELOC payments — or qualifying for one — may become difficult.
Key risk: If you capitalize interest on a HELOC (make minimum payments while the balance grows), you may reach the credit limit. At that point, the bank can demand repayment. With a reverse mortgage, there is no such call risk — the loan stays in place until you sell, move, or pass away.
Bottom line: If you qualify for a HELOC and can comfortably make the payments, it will cost less. If monthly payments are a burden or your income doesn't qualify, a reverse mortgage may be the better fit.
Downsizing / Selling Your Home
Selling frees up the most capital and eliminates housing debt entirely. But it also means leaving your home, your neighbourhood, and your community. Transaction costs (realtor commissions, legal fees, moving, land transfer tax) can consume 5–8% of the sale price.
For many homeowners, the emotional cost of leaving matters more than the financial math. A reverse mortgage lets you access equity while staying put.
BC Property Tax Deferment Program
BC offers a property tax deferment program for homeowners 55+. The province pays your property taxes, and the amount is registered as a lien against your home at a low interest rate. This can help with cash flow if property taxes are your main concern.
However, with recent changes to the program's interest rate, a reverse mortgage can now cost less than tax deferment in some situations. We can help you compare both options for your specific case.
Note: If you already have a reverse mortgage, you may still qualify for the tax deferment program — consult with us.
Deeper dive: Read Adriana's detailed analysis — HELOC vs Reverse Mortgage: Which Is Right?