Not all reverse mortgages are the same. Understanding the types of reverse mortgages available in Canada helps you choose the right structure for your age, your home, and how you want to receive your money. This guide breaks down the main types, how they differ, and a short-term alternative worth knowing about if you are not yet 55.
The Main Types of Reverse Mortgages in Canada
A reverse mortgage lets Canadian homeowners aged 55 and older borrow against their home equity with no monthly payments, up to 59 percent of the home’s value. But the way you receive and manage the funds can vary. Here are the main types available.
1. Lump-Sum Reverse Mortgage
You receive the full approved amount in one payment upfront. This suits homeowners with a specific, larger need — paying off an existing mortgage, funding a major expense, or clearing debt. Interest begins accruing on the full amount right away, so it costs more over time than drawing gradually.
2. Scheduled-Advance Reverse Mortgage
Instead of one lump sum, you receive regular payments over time — monthly, quarterly, or annually. This works well as an income supplement for retirees who want to top up their cash flow steadily. Because you only draw as you go, interest accrues more slowly, preserving more of your equity.
3. Combination Reverse Mortgage
Many homeowners take a portion upfront and set up the rest as scheduled advances. This blends an immediate need with ongoing income, and keeps interest costs lower than taking everything at once. It is the most flexible of the three.
Reverse Mortgage Providers in Canada
Reverse mortgages in Canada are offered through a small number of established providers, and the type and terms available depend on which one fits your situation:
- CHIP (HomeEquity Bank) — the longest-established provider, with flexible lump-sum and advance options
- Equitable Bank — competitive rates and terms for qualifying homeowners
- Bloom — a newer provider with its own product structure
At Turnedaway.ca we compare all three to match you to the right type and provider for your age, your home, and your goals, rather than sending you to a single lender.
How to Choose the Right Type
The right structure comes down to how you need the money. Choose a lump sum for a large one-time need, scheduled advances for steady income, or a combination for both. Since the older you are the more you can borrow, and since interest compounds on whatever you have drawn, taking only what you need when you need it preserves more of your equity for the future.
Not Yet 55? Consider a Prepaid Home Equity Loan
Every type of reverse mortgage requires you to be at least 55. If you are younger and hit a temporary setback — a layoff, a termination, or an illness that interrupts your income — there is a short-term option that borrows the best feature of a reverse mortgage: no monthly payments.
A prepaid home equity loan on a one-year term has the interest prepaid for the year, so there are no payments to manage while you get back on your feet. It is a short-term bridge, not a long-term fix, and it only works with a clear exit strategy — returning to work, selling, or refinancing once you qualify. But for a homeowner under 55 who is caught off guard without savings, it can be exactly the breathing room they need. Reach out and we can talk through whether it fits.
How Turnedaway.ca Can Help
Whether one type of reverse mortgage fits, or a prepaid short-term option makes more sense, we walk you through the choices with no pressure. We compare CHIP, Equitable Bank, and Bloom to find the best terms for your situation, and we have helped Canadian homeowners access their equity for over 30 years. Apply online or call 1-855-668-3074 for a free, no-obligation consultation.
Types of Reverse Mortgages FAQs
What are the main types of reverse mortgages in Canada?
The main types are a lump-sum reverse mortgage (all funds upfront), a scheduled-advance reverse mortgage (regular payments over time), and a combination of both. Each suits a different need and affects how quickly interest accrues.
Which type of reverse mortgage costs the least?
Drawing gradually through scheduled advances usually costs less than taking a lump sum, because interest only accrues on what you have actually received. A combination approach balances an upfront need with lower ongoing interest.
Who offers reverse mortgages in Canada?
Reverse mortgages are offered through CHIP (HomeEquity Bank), Equitable Bank, and Bloom. A broker can compare all three to match you to the right type and terms for your situation.
What if I am not old enough for a reverse mortgage?
A reverse mortgage requires all homeowners on title to be at least 55. If you are younger and need a short-term solution, a prepaid home equity loan on a one-year term can bridge a temporary income gap, provided there is a clear exit strategy.
