Reverse mortgage blog
How to Release Equity From Your Home in Canada (2026)
General information for Canadian homeowners, not personal financial, legal, or tax advice.
Key takeaways
- There are five ways to release equity from a home in Canada — a reverse mortgage, a home equity line of credit, a home equity loan, a refinance, or selling — and the federal consumer agency notes lenders sometimes call the borrowing routes exactly that: "equity release" (FCAC).
- A home equity line of credit and a refinance are approved on income: the bank measures your debts against your income, and proves you could carry the payments at a higher rate than you would actually pay (FCAC).
- A reverse mortgage is the one borrowing route with no bank-style income test: approval is based mainly on age, home value, and location, it unlocks up to 46% of home value at 55 — rising to 60% at the market's top tier — and it has no required monthly mortgage payments (FCAC).
- Selling releases the most equity but costs the most to do it: realtor fees of about 5% plus HST on those fees, land transfer tax on the next home, legal fees at both ends, and the move itself.
- Only four government regulated lenders offer reverse mortgages in Canada — the big banks do not (Home Trust press release) — and no single lender shows you the other three's offers.
To release equity from your home in Canada, there are five routes — a reverse mortgage, a home equity line of credit, a home equity loan, a refinance, or selling. Which one fits comes down to income and monthly payments.
For many Canadian homeowners past 55, most of their money is not in a savings account. It is in the home itself — and at some point, many want to turn part of that value into money they can spend, without giving up the house.
The challenge is not finding a way to do it. There are five: a reverse mortgage, a home equity line of credit, a home equity loan, a refinance, or selling. The challenge is that the five work very differently — and that much of what a search on “releasing equity” brings up is written for homeowners in Britain, under different rules.
Some routes require income approval and monthly payments. Others do not. This page walks through how to get each of the five in Canada — what qualifies you, what it costs to set up, and what it costs every month afterward.
What are the five ways to release equity from a home in Canada?
Your equity is the part of your home’s value you actually own — the value minus anything still owed on it. Releasing it means borrowing against the home while you keep living in it (a reverse mortgage, a home equity line of credit, a home equity loan, or a refinance), or selling it and keeping what’s left after costs.
The Financial Consumer Agency of Canada groups the first four as borrowing against home equity — and notes lenders sometimes call that exactly what you searched: equity release.
What separates the routes is income. A line of credit and a refinance are approved the way any bank mortgage is: on provable income. A reverse mortgage is approved mainly on your age, your home’s value, and its location — and a home equity loan goes either way, depending on who lends it. Selling needs no approval at all.
| Route | How you get approved | One-time set-up costs | What you pay monthly |
|---|---|---|---|
| Reverse mortgage | Age 55+, home value, and location — no bank-style income test | Appraisal (usually about $350), lender set-up fee, independent legal advice | Nothing required — no monthly mortgage payments (property taxes, insurance, and upkeep stay yours) |
| Home equity line of credit | Full income approval, tested on the whole limit | Appraisal and legal fees | Interest every month, rising when bank rates rise |
| Home equity loan | At a bank (paid-off home): full income approval. From a private lender: mainly the home’s equity | Appraisal and legal fees — private lenders add high set-up fees | A payment every month — principal and interest at a bank, typically interest only at a private lender |
| Refinance | Full income approval on the new, bigger mortgage | Appraisal and legal fees, plus a possible charge for ending your current mortgage early | Principal and interest every month |
| Selling | No approval — a realtor, a lawyer, and a buyer | Realtor fees of about 5% plus HST on those fees, land transfer tax on the next home, legal fees at both ends, the move | No mortgage — but the next home still has to be paid for |
How do you release equity with a reverse mortgage?
A reverse mortgage is the route built for homeowners 55 and older. It lends against the home with no required monthly mortgage payments: instead of being paid monthly, the interest is added to the balance, and the loan is repaid when you sell, move out permanently, or when the last borrower passes away. The full product walk-through lives in what a reverse mortgage is — here is how getting one goes.
Qualifying is based mainly on your age, your home’s value, and its location (for a couple, both spouses must be 55 or older — the fine print is in the requirements guide). There’s no stress test — the banks’ rule of proving you could pay at a higher rate — and no debt-ratio math.
The lender still looks at income, far enough to be satisfied the property taxes are comfortably affordable — a lighter look most retired homeowners meet without difficulty.
Five steps from estimate to money in the bank
The whole thing usually takes a few weeks:
- A free estimate. What your age and home would qualify for, across every lender — before any application, with no credit bureau pulled.
- The application. Once you choose a lender and an amount, the paperwork is light — no income documents like a bank’s.
- An appraisal. A professional appraiser values the home, on almost every file, usually about $350.
- Independent legal advice. You review the mortgage with your own lawyer, who confirms you understand it — typically $800 to $1,200, billed by your lawyer.
- Funding. Anything still owed on the home — a mortgage, a line of credit — is paid off and closed first, always. Whatever is left comes to you as tax-free cash, as a lump sum, monthly deposits, or both.
Set-up costs run from about $2,000 to $3,500 in total — the appraisal, a lender set-up fee of typically $795 to $1,795, and the legal advice — and most of it can be paid out of the mortgage rather than out of pocket.
Two protections come with every one of these mortgages. You stay on title as the owner. And as long as the homeowner obligations are met, you or your estate never repay more than the home’s fair market value at the time the mortgage becomes due.
Only four government regulated lenders offer reverse mortgages in Canada, and they won’t all offer the same amount on the same house. The calculator below shows the market’s ceiling — what the strongest of the four would offer at your age, not any single lender’s number — and how the balance and your remaining equity move over the years:
Here's What Happens to Your Equity
Adjust the sliders below to see how your equity can change over time.
Need more than this estimate?In some situations we can structure additional financing to unlock more of your equity — contact us to see if it fits your situation.
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Your 15-Year Forecast
In 15 years, your home is projected to be worth $1,935,282 (at 4.5% growth). Even with the growing loan balance, you would still have$1,288,355in remaining equity!
*Disclaimer: These projections are for illustration purposes only and should not be considered financial advice. Projections assume 4.5% annual appreciation and 6.44% interest rate. Actual results may vary based on market conditions and individual circumstances.
Your 15-Year Forecast
In 15 years, your home is projected to be worth $1,935,282 (at 4.5% growth). Even with the growing loan balance, you would still have$1,288,355in remaining equity!
This calculator is for illustration only. Your real numbers depend on your age, lender, rate, and home value — which is exactly what a free estimate works out for you.
See what your own home could release
A free, no-obligation estimate shows your real number — your age, your home, every reverse mortgage lender in Canada compared. No cost, no credit check.
Get my free estimateHow do you get a home equity line of credit?
A home equity line of credit is a borrowing limit backed by your home — you take money out when you want it, pay interest on what you’ve taken, and can pay it back and borrow again. The limit can reach 65% of the home’s value (FCAC), minus anything already owed.
Getting one means a full bank-style approval: provable income, your debts measured against that income, and the stress test — proving on paper you could afford the payments at a rate higher than the one you’ll actually pay. An independent broker arranges these too.
The bank tests the whole limit — before you draw a dollar
One detail surprises retirees. The bank tests the full limit as if you had borrowed every dollar of it, even if you plan to take out only a small part. A $150,000 line must be affordable, on paper, out of your income — which is why this route is hard to get on a pension.
Set-up means an appraisal and legal work, typically a few hundred to about $1,500. After that, interest payments are required every month, the payment rises when bank rates rise, and the lender keeps the right to reduce or freeze the line later. The full comparison with the reverse mortgage is in reverse mortgage vs HELOC.
How does a home equity loan release equity?
A home equity loan is a new lump-sum mortgage on your home — a second mortgage if you already have a first one, or a new first mortgage if your home is paid off and free and clear. The money arrives once, as a single amount, and total borrowing can reach 80% of the home’s value (FCAC).
How you get one depends on who lends it. On a paid-off home, a bank offers it as a new first mortgage — the same approval as any mortgage: provable income and the stress test.
But banks and other lowest-rate lenders don’t offer second mortgages behind an existing first. Those come from private lenders (and a few subprime lenders — lenders that approve borrowers the big banks turn down), approved mainly on the home’s equity — with high set-up fees, a higher rate, and a term of a year or two.
Afterward you make a payment every month — principal and interest at a bank, typically interest only at a private lender, where the balance doesn’t shrink on its own. As a second mortgage it’s a short bridge, not a mortgage to keep: renewal isn’t guaranteed, renewing typically costs the set-up fee again, and it fits when the current mortgage has a rate worth keeping and the exit is already planned — a sale, or a refinance within a year or two.
How does refinancing release equity?
Refinancing replaces your current mortgage with a bigger one. It pays off your current mortgage (and a secured line of credit, if you have one), and the extra money lands in your bank account to use as you please. Total borrowing can reach 80% of the home’s value (FCAC) — the same ceiling as the home equity loan.
The approval is the same as any mortgage: provable income, debt ratios, the stress test, an appraisal, and legal work. If you’re partway through your current mortgage term, there’s usually also a charge for ending it early — it belongs in the math before you commit.
Afterward you make principal-and-interest payments every month on the new, bigger balance. For a household with strong income this is often the cheapest borrowing route — its rates run the lowest of the five. On a fixed income, the same stress test that makes the line of credit hard to get applies here too. The full map of every 55+ borrowing option, income math included, is in mortgages for seniors in Canada.
What does selling to release equity really cost?
Selling is the one route that releases everything: the home’s full value, minus what’s still owed and the costs of selling. It’s also the one route where you leave the home — and the costs are bigger than most people expect.
The costs come out of the sale before anything reaches you
Realtor fees run about 5% of the sale price, plus HST on those fees. Buying the next place adds land transfer tax (the tax charged when you buy a home), legal fees at both ends, and the move itself. On a $900,000 sale, that runs to tens of thousands of dollars — spent before a dollar of the next home is paid for.
Selling also changes daily life: a new street, new neighbours, and the routines of a familiar home left behind. And if the next home needs a mortgage, that mortgage is approved on income, like the other bank routes.
The estimator below runs that math with your own numbers — what a sale leaves after the selling costs, and what’s left after paying for the next home:
What would selling actually leave you?
Enter your own numbers. The costs are typical Ontario figures — realtor fees at 5% plus HST, standard legal fees, and land transfer tax on the next home.
Your numbers
What the sale leaves
Buying the next home
A gap like this is usually closed with a mortgage on the new home — approved on income — or a reverse mortgage on it, which is not.
An estimate, not a quote. Moving costs are not included, and your own realtor, lawyer, and lender figures may differ. Whether selling or borrowing leaves you further ahead is what a free estimate prices side by side.
If the numbers come up short of the next home, selling doesn’t have to be the whole plan — a reverse mortgage can cover part of a purchase too, which buying a house with a reverse mortgage walks through step by step.
For some households selling is the right move. Whether it leaves you further ahead than borrowing is a math question — and a broker prices both paths for free.
How much equity can you release?
Every route to releasing equity has its own ceiling, and each figure is an “up to” — whatever is still owed on the home is subtracted first. A refinance or a home equity loan can take total borrowing up to 80% of the home’s value, a home equity line of credit up to 65%, and a reverse mortgage up to 46% at age 55, climbing with age to 60% at the market’s top tier. Selling releases the full value, minus the selling costs above.
For the reverse mortgage, age, home value, and location set the number. The age-by-age percentages are mapped in how much a reverse mortgage pays by age, and the calculator models the balance over time for your own numbers.
Which way of releasing equity fits you best?
The first question isn’t which route — it’s whether releasing equity is the right move at all. Sometimes the better answer is none of the five: the goal is too small to justify the costs, or a sale is already close and nothing is needed in the meantime.
From there, income does most of the sorting. Strong provable income and comfort with monthly payments point to a refinance, a home equity loan, or a line of credit — the cheapest borrowing, and an independent broker arranges those too.
A fixed income, or a firm preference for no monthly mortgage payments, points to the reverse mortgage — the one route where the income math was never the test. And if the money is for fixing up the home, using a reverse mortgage for home renovations walks that case — including taking the money in stages as the work gets done. And a household already leaning toward a move should price the sale against the borrowing routes before deciding.
That sorting is a broker’s daily work, it’s free to the homeowner, and the recommendation can genuinely be “not yet” — how to choose a reverse mortgage broker covers what to ask before you pick who runs the numbers.
If the reverse mortgage route is new to you, the free guide below walks through it at full depth — how much you could unlock, what it costs, how the four lenders differ, and when it’s the wrong choice:
Free Guide:The Canadian Reverse Mortgage Guide
- ✓How much tax-free cash you could unlock — and what moves the number
- ✓The real costs, rates, and fees — nothing buried in fine print
- ✓How the lenders (CHIP, Equitable Bank, Home Trust, Bloom) really compare
- ✓When a reverse mortgage is the wrong choice
Simply enter your info below and a PDF copy will instantly be sent right to your inbox.
Frequently asked questions
How do you release equity from your home in Canada?
There are five routes. A reverse mortgage lends against the home with no required monthly mortgage payments, for homeowners 55 and older. A home equity line of credit, a home equity loan, and a refinance all lend against the home with monthly payments. Selling releases everything at once, minus the costs of the sale and whatever is still owed. The first four keep you in the home. The fifth does not.
How much equity can I release from my home?
It depends on the route. A refinance or a home equity loan can take total borrowing up to 80% of the home's value, and a home equity line of credit up to 65%, all minus anything already owed. A reverse mortgage unlocks up to 46% of the home's value at age 55, climbing with age to 60% at the market's top tier — age, home value, and location decide the number. Selling releases the full value, minus selling costs and whatever is owed.
Which way of releasing equity is cheapest?
It depends on income and on payment preference. For a homeowner with strong provable income who is comfortable making monthly payments, a refinance or a home equity line of credit usually carries the lowest rate. For a homeowner on a fixed income, or one who wants no monthly mortgage payments, the reverse mortgage is built for exactly that — the rate runs higher, and in exchange nothing is owed monthly. A broker prices the routes side by side for free, so the comparison is real numbers rather than a guess.
Can I release equity from my home without monthly payments?
Yes — that is what a reverse mortgage is for. If you are 55 or older, you borrow against the home, and instead of being paid monthly, the interest is added to the balance and repaid when the home is sold, the owners move out permanently, or the last borrower passes away. Property taxes, home insurance, and reasonable upkeep remain the homeowner's responsibility, the same as with any mortgage.
Get every route priced for your situation
A free, no-obligation estimate shows your real numbers — every reverse mortgage lender in Canada compared, and whether a line of credit or refinance fits better. No pressure, no credit check.
Get my free estimate About the author
Richard Hopkins
Licensed Mortgage Broker · M16000896
Richard has worked in the mortgage business since 2013 — first as a mortgage agent, today a licensed mortgage broker — and leads the reverse mortgage practice at Homestead Financial — Dominion Lending Centres, an FSRA-licensed Ontario brokerage (#11711) with roots in the industry since 1999 and more than 2,500 mortgages funded. More about Richard →
This article is general information for Canadian homeowners, not personal financial, legal, or tax advice. Everyone's situation is different — please get advice on your own numbers before making a decision.