CANADIANS AGED 55+ NEED TO BE PREPARED AS MORTGAGE OPTIONS NARROW

Reverse mortgages can fill the gap for those who no longer qualify for a conventional mortgage

As more Canadians move into semi-retirement, retirement, or self-employment, many expect to refinance to manage debt, access equity, or improve their mortgage terms.

According to Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert, that assumption is increasingly being challenged.

If you are in the 55+ age category, changes in income, higher living costs, and stricter qualification rules can seriously narrow your financing flexibility, she cautions.

“Many homeowners approaching retirement assume they’ll be able to refinance the way they always have, but that’s becoming much harder,” says Zlatkin. “Even with substantial home equity, income changes can significantly limit access to traditional refinancing and leave borrowers with fewer options.”

Those income changes can lead to problems, in that many Canadians in the 55+ group may not plan for all of life’s expenses — there are all the regular bills to consider such as heating, hydro and property taxes — but unexpected costs related to health care and caregiving may mean people in this age group will find spending tight, she says.

“We’re seeing many Canadians reach this stage of life without having planned for how they’d manage financially once income changes,” says Zlatkin. “When savings are limited and traditional refinancing isn’t an option, families are often forced to make decisions quickly. That’s where reverse mortgages are increasingly coming into the conversation, especially when care needs or other life changes arise.”

Zlatkin says that for sure, “there has been some stigma with reverse mortgages, and they aren’t for everybody but they can be a valuable tool for those who no longer qualify for a conventional mortgage,” she says.

“While they typically carry higher interest rates than conventional mortgages, they don’t require the same income qualification, making them a viable option for some households.”

Another option, she says, and adding that she has seen it happen, is using equity to finance the purchase of a smaller place, renting it out for now and then moving into it later when an income situation changes.

This has the advantage of allowing people to preserve their equity, which is beneficial for parents want to be able to pass along inheritance money to their children.

Regardless, Zlatkin advises homeowners to do the math. A good rule of thumb to follow is that for every $1 of retirement income, whether CPP, OAS or some other form, is that you can afford to carry $4 of mortgage debt, so for example, $50,000 of income qualifies for $200,000 in mortgage financing.

2026-02-13T14:30:27Z