Reverse Mortgage (CHIP) Calculator Canada

This Canada reverse mortgage calculator shows how much you could release, what the balance grows to with no payments and the equity left at the end.

Current value of your home C$

Age of the youngest homeowner years

Maximum loan-to-value your lender offers at that age %

Advance you want to draw now C$

Reverse mortgage interest rate %

Years you expect to keep the loan years

Advanced options

Existing mortgage to be repaid from the advance C$

Set-up costs (appraisal, legal, administration) C$

Expected annual home price growth %

Maximum you could borrow —

Advance actually drawn —

Cash in your hand after set-up and payout —

Loan balance at the end of the period —

Interest added over the period —

Projected home value at the end of the period —

Equity left in the home —

Loan as a share of the projected home value —

Borrowing room still unused —

Your age at the end of the period —

We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.

What it does

The Canada reverse mortgage calculator shows how much a CHIP-style reverse mortgage could release from a home, what the balance grows to while no payments are being made, and how much equity is projected to be left when the property is eventually sold.

Data sources & parameters

This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.

The formula

Maximum advance = home value x maximum loan-to-value; Balance after n years = advance x (1 + rate / 2)^(2n); Equity = projected home value - balance

How it works

The maximum advance is the home value multiplied by the loan-to-value your lender offers at the youngest owner's age. The advance you actually draw pays off any existing mortgage and the set-up costs first, and the rest reaches you as cash. From there the balance compounds at the quoted rate on the Canadian semi-annual convention while the home is projected forward at its own growth rate, and the difference between the two is the equity left.

Where it is used

Sizing the cash a reverse mortgage could release before speaking to a lender
Seeing how fast a balance with no monthly payments compounds over ten, fifteen or twenty years
Testing whether the home is likely to grow fast enough to preserve an inheritance

Worked example

A homeowner aged 70 owns a house worth CA$800,000.00 outright. The lender will advance up to 40 percent of the value at that age, which is …, and the owner draws … of it. After set-up costs of CA$1,795.00 the cash in hand is …. No payments are made, so at 7.25 percent compounded semi-annually the balance reaches … after 15 years, of which … is interest. If the home grows at 3 percent a year it is worth … by then, leaving … of equity, with the loan standing at … of the property. The owner is … at that point and still has … of unused borrowing room.

What the reverse mortgage calculator does

The calculator answers two questions: how much money can you take out of the house now, and what will be left of it afterwards? It sizes the maximum advance from the home value and the loan-to-value your lender offers at your age, subtracts any existing mortgage and set-up costs to give the cash that reaches you, then grows the balance for as long as you expect to keep the loan and compares it with a projected home value.

A reverse mortgage is a mortgage with no payments. You borrow against the equity in your home, interest is added to the balance, and nothing is repaid until the home is sold or the last borrower leaves it. That helps asset-rich, cash-poor retirees, and it means a debt that is never paid down grows at the interest rate alone.

Why the lender figures are inputs

There is no statutory maximum loan-to-value for a Canadian reverse mortgage, no set rate and no published fee schedule. Two lenders dominate the market and both underwrite case by case, on the youngest homeowner’s age, the city, the property type and condition and their own view of the local market. The rate depends on the term and the day’s funding cost. So the calculator asks for three numbers from your own quote: the maximum loan-to-value at your age, the interest rate and the set-up costs.

The compounding is the whole story

Canadian mortgages, reverse mortgages included, quote an annual rate compounded semi-annually, so a balance left to grow becomes the advance times (1 + half the rate) raised to twice the number of years. At about 7.25% a balance roughly doubles in ten years and nearly triples in fifteen.

The house usually grows too, and whether equity survives depends on which rate is larger, by how much and for how long. Use a home growth rate you actually believe and look at the loan-to-value at the end. If it is moving toward 100%, the plan is spending the inheritance, which can be a reasonable choice if it is a deliberate one.

A worked example

A 70-year-old with an $800,000 home and a 40% maximum loan-to-value can borrow up to $320,000. Drawing $250,000 with a $1,795 set-up fee and no existing mortgage puts about $248,205 in hand and leaves $70,000 of unused room. At 7.25% for 15 years the balance grows to about $727,573, about $477,573 of it interest. With the home growing 3% a year to about $1,246,374, about $518,801 of equity remains at 85, a loan-to-value of about 58%.

Reading the outputs

The maximum available is a ceiling, not a target. Drawing it all on day one starts interest on the largest possible balance, which is why lenders offer a lump sum plus scheduled advances: money not yet drawn does not accrue interest. Unused room is available for a later advance, subject to the lender’s approval.

Cash in hand often surprises people. Any existing mortgage must be discharged from the advance first, and the appraisal, independent legal advice and administration costs come out of the same money.

Equity left is the estate figure: projected value at the end less the balance, floored at zero because of the no-negative-equity guarantee. The guarantee protects the estate from a shortfall, not from receiving nothing.

What to compare it against

A home equity line of credit is far cheaper but needs income qualification and monthly interest payments. Downsizing releases more equity and ends the interest cost, at the price of leaving the house. A conventional mortgage or secured line taken while still working is cheaper again. Compare the total cost of each over the years you expect to need the money.

What this calculator does not do

It does not model scheduled advances, voluntary interest payments or a rate change at renewal, and it does not apply prepayment charges, which can be large in the first few years. It does not check whether you qualify, whether a spouse must be on title or whether the property is acceptable to the lender. The advance itself is not income, so it is not taxable and generally does not affect income-tested benefits.

All figures are estimates based on the home value, rate, term and lender terms you enter, and this page is not financial, mortgage or legal advice. Get an illustration from the lender and independent legal advice before signing anything.

About This Tool: Canada Reverse Mortgage

Canada reverse mortgage: use this tool to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.

Frequently asked questions

How much can a reverse mortgage release?

Canadian lenders normally advance between 15% and 55% of the appraised value, more for an older youngest homeowner and less for a property the lender sees as harder to sell. There is no published table, because each lender runs its own model on age, location, property type and condition, so take the percentage from your own quote.

Do I make any payments?

No, which is the defining feature. Interest is added to the balance instead of billed, so the debt grows every year and nothing leaves your bank account. Both main Canadian lenders allow voluntary interest payments, and paying even part of the interest each year noticeably slows the growth.

Can I end up owing more than the house is worth?

Canadian reverse mortgages carry a no-negative-equity guarantee, so if you keep to the contract the amount repayable is capped at the home's fair market value when it is sold, and no shortfall passes to your estate. What you can lose is the inheritance: as the loan-to-value shown here nears 100%, nothing is left over.

What is the interest rate on a reverse mortgage?

Noticeably higher than a conventional mortgage rate, often a couple of points above, because the lender receives nothing until the house is sold and cannot know when that will be. Rates are quoted per term, lender and applicant, so enter the one on your illustration.

When does the loan have to be repaid?

When the last borrower sells, moves out permanently, moves into long-term care or dies. The estate normally has a set window, commonly six months, to repay from the sale or other funds. Ending the contract early can bring a prepayment charge that falls away over the first few years.

Is a HELOC a better option?

It is cheaper if you can carry it. A home equity line of credit has a much lower rate, but it requires you to qualify on income and to pay at least the interest every month, which many retirees cannot. A reverse mortgage costs more precisely because it removes both requirements.

About the author

Written and reviewed by

Taha Kheirandish

Economics student and independent researcher

Taha Kheirandish reads tax codes the way other people read maps — to find out where a system actually leads, not where it claims to go.

He is an economics student, and his work here is comparative by design. A pension deferral bonus in Quebec, a commuting allowance in Germany, a rent-increase ceiling in the Netherlands: each is a decision a government made about how money should move, and each reads differently once you set it beside eight others. He builds and checks these calculators across nine markets from primary sources — the regulation rather than a summary of it, the ministry’s own circular rather than a news item quoting it.

That is the editorial standard of the site as well as his habit. Every rate, threshold and bracket here carries the document it was read from and the date it takes effect, and gets re-checked when the law moves rather than when someone happens to notice.

He is a researcher, not a licensed adviser, and nothing on this site is personal financial advice. It is arithmetic done carefully with its sources shown — so that you can check it, and take it to someone who is.

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