Reverse mortgage blog
Reverse Mortgage vs Downsizing in Ontario: The Real Math (2026)
General information for Canadian homeowners, not personal financial, legal, or tax advice. Rates and lender details verified as of July 20, 2026.
Key takeaways
- Downsizing from a $900,000 home to a $700,000 one in Ontario costs about $65,000 before the movers are paid: realtor fees of about 5% plus HST on those fees, land transfer tax on the next home, and legal fees on both the sale and the purchase (worked example below).
- Toronto is the only city in Ontario with its own second land transfer tax — buying the next home inside the city doubles the land transfer bill: about $20,950 on a $700,000 purchase instead of $10,475 (City of Toronto).
- A reverse mortgage costs about $2,000 to $3,500 in one-time set-up costs, and posted 5-year fixed rates run 6.23% to 6.39% as of July 2026 — the interest is added to the balance over the years instead of paid monthly (the full fee list; Canadian Mortgage Trends).
- On the same money freed, the one-time costs of moving equal more than six years of reverse mortgage interest — more than seven inside Toronto. And the moving money is spent today, while the interest is paid years from now in dollars that buy less — stretching the true gap further still (worked example below, assumptions stated).
- Most homeowners who talk about downsizing never do it: just 16% of Canadians 65 and older expect to move to a smaller home within the next decade, and 65% report low or no suitable smaller homes nearby to move into (RE/MAX Canada, April 2026).
Reverse mortgage vs downsizing in Ontario: selling a $900,000 home and buying for $700,000 costs about $65,000 in one-time moving costs — more than six years of what a reverse mortgage charges in interest for the same money in hand.
Most homeowners weighing a reverse mortgage have heard the same advice, usually from someone who cares about them: sell the house and buy something smaller instead.
The challenge is that the advice is almost never priced. Selling one home and buying another carries real one-time costs — realtor fees plus the HST on them, land transfer tax on the next home, a lawyer at both ends, and the move itself — all paid out of the sale money before a dollar of it gets used.
A reverse mortgage carries the opposite kind of cost. Little is paid up front, and interest builds on the balance over the years instead. One path spends money once. The other spends it slowly.
This page totals every selling cost on one real Ontario example, sets the borrowing costs beside them, and shows the point where each path becomes the cheaper one.
What does downsizing actually cost in Ontario?
On a typical move — selling for $900,000 and buying a smaller home for $700,000 — about $65,000, before the movers are paid.
That surprises most families, because the costs are spread across half a dozen bills that never get added up in one place. Here they are, added up:
| One-time cost of moving | What it is | On this example |
|---|---|---|
| Realtor fees | About 5% of the $900,000 sale price | $45,000 |
| HST on realtor fees | 13% tax on the $45,000 | $5,850 |
| Legal fees — the sale | Your lawyer’s bill for selling | about $1,800 |
| Land transfer tax | The tax the province charges when you buy the $700,000 home | $10,475 |
| Legal fees — the purchase | Your lawyer’s bill for buying | about $1,800 |
| Movers and getting the home ready | The move itself, painting, small repairs, a cleaner | on top of everything above |
| Total before the movers | about $65,000 |
That $65,000 comes off what the family owns the moment the sale and the purchase close. It buys no house and pays off no debts — it is the price of the move itself.
The tax that doubles inside Toronto
Toronto is the only city in Ontario that charges its own, second land transfer tax on top of the province’s.
Buy the next home inside the city, and the land transfer bill doubles: about $20,950 on a $700,000 purchase instead of $10,475. The whole move then totals about $75,400 — again before the movers are paid.
Whether moving or staying leaves you further ahead is a math question, and a broker prices both paths for free — the lender pays the broker, not you. A real number for staying put takes two minutes:
See what staying put would free up
A free, no-obligation estimate shows how much a reverse mortgage could unlock on your home — a real number to weigh against the cost of moving. No cost, no obligation, no credit check.
Get my free estimateWhat does a reverse mortgage cost instead?
Two kinds of cost — small one-time costs, and interest over the years.
The one-time costs total about $2,000 to $3,500: a home appraisal at usually about $350, independent legal advice at $800 to $1,200 from your own lawyer, and a lender set-up fee of $795 to $1,795 that is built into the mortgage. Most of it never leaves your bank account, and the full fee list itemizes every line. A broker can often get the set-up fee reduced — sometimes waived — and that work is free to you, because the lender pays the broker.
The larger cost is the interest. Posted 5-year fixed rates run 6.23% to 6.39% as of July 20, 2026, and instead of being paid monthly, the interest is added to the balance. Nothing is owed until you sell, permanently move out, or the last borrower passes away. Reverse mortgage rates in Canada carries the current numbers and seven years of rate history; the complete Ontario guide covers the product in full.
So the comparison is really this: downsizing pays roughly $65,000 once. A reverse mortgage pays a few thousand once — and then interest, year after year. The next section shows when the slow path catches up to the fast one.
Which path costs more over the years?
It depends on how long the borrowing runs — so here is the same example, carried forward.
Selling at $900,000 and buying at $700,000 frees $200,000 — minus the $65,000 of moving costs, about $135,000 in the family’s hands. A reverse mortgage of $135,000 puts the same money in hand without the move. At 6.3% — the middle of the posted July 2026 range — here is what that borrowing has cost, year by year:
| Years in | Balance owing at 6.3% (July 2026) | Interest added so far |
|---|---|---|
| Year 1 | about $143,600 | about $8,600 |
| Year 3 | about $162,600 | about $27,600 |
| Year 5 | about $184,100 | about $49,100 |
| Year 7 | about $208,400 | about $73,400 |
| Year 10 | about $251,000 | about $116,000 |
Every row is the same $135,000 mortgage, with interest calculated the same way as on a traditional Canadian mortgage — compounded twice a year — the rate held steady, and no payments made.
Now set the two paths side by side. The $65,000 it costs to move equals more than six years of this interest. Inside Toronto, the moving costs are about $10,500 higher, so the same math stretches past seven years.
In other words: for the first six years or so, staying put and borrowing has cost the family less than moving would have — and the family is still in their own home.
Why $65,000 today hurts more than $65,000 in six years
One more thing changes the math, and everyone who has watched grocery prices knows it: a dollar buys a little less every year.
The moving costs are paid today. The reverse mortgage’s interest is paid years from now, when the home is eventually sold — in dollars that will each buy less by then.
If prices rise about 3% a year, paying $65,000 six years from now is like paying about $54,000 today. Counted that way, it takes more than seven years before the borrowing has truly cost as much as the move.
What the home is doing while the balance grows
The balance is only half the picture. The home’s value usually rises over those same years, and that growth offsets some or all of the interest — which is why Canadian reverse mortgage borrowers keep about half of their home’s value on average, even after many years.
Two more things belong in the picture, one for each side. A $900,000 home growing in value earns more dollars each year than a $700,000 one — staying put keeps the bigger number working. On the other side, a smaller home usually costs less to run — lower property taxes, lower heating, less upkeep — and those monthly savings are downsizing’s genuine, lasting advantage.
No one can promise how fast a home’s value will grow. That is exactly why the comparison is worth running on your own numbers rather than anyone’s example — the calculator below takes your home’s value, your age, and the amount you have in mind, and shows the balance and what stays yours 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 reverse mortgage 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.
How much money would selling actually free up?
The estimator below runs the selling side on your own numbers — the same typical Ontario costs as the table above, with your prices in place of the example’s.
Enter what your home would sell for, anything still owing on it, and the price of the place you would buy. Tick the Toronto box if the next home is inside the city, and both land transfer taxes are counted:
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 number it leaves is smaller than you hoped, you have just learned that at no cost — many families only learn it after the house is already sold.
Can a reverse mortgage help you downsize?
The two are not always opposites. For some families, a reverse mortgage is what makes the move work.
When the next home has to be bought before the old one sells. Closing dates do not always line up, and some lenders can cover both homes for the overlap. They need a firm sale on the old home first — a signed agreement, conditions cleared, so the money is certain to arrive.
When the smaller home is not actually cheaper. A condo near the grandkids, or a bungalow in the right neighbourhood, can cost as much as the family home sells for — or more. A reverse mortgage on the new home covers the difference, with no monthly mortgage payments afterward.
Both are purchase questions, and buying a house with a reverse mortgage walks them through step by step — how much of the price the mortgage covers, and how to get pre-qualified before making an offer.
Price both paths before you decide anything
A free, no-obligation estimate shows what a reverse mortgage would lend on your current home or the next one — compared across every reverse mortgage lender in Canada. No cost, no credit check.
Get my free estimateDo most Canadians actually downsize in retirement?
No — and the gap between talk and action is wide. In RE/MAX Canada’s April 2026 survey, just 16% of Canadians 65 and older said they expect to move to a smaller home within the next decade.
Part of the reason is supply: 65% of the same group report low or no suitable smaller homes in their area. The bungalow or the right-sized condo the plan depends on often is not there to buy — and moving somewhere that fits worse defeats the point.
So when “just downsize” comes up at the kitchen table, it is worth knowing how it usually goes: most homeowners who say it never do it. More and more Canadians are choosing to stay in the home they know and borrow against it instead — the market numbers behind that shift live in reverse mortgage statistics for Canada.
When does downsizing win — and when does staying?
Both paths have situations they genuinely win. Downsizing tends to be the better answer when:
- The move is wanted for its own sake. One floor instead of three, a smaller garden, a street closer to the grandkids. When the move itself is the goal, the costs buy something real.
- More money is needed than a reverse mortgage can lend. A reverse mortgage lends up to 55% of the home’s value — up to 60% at the market’s top tier for borrowers 70 and older. Selling frees everything above the costs, so a plan that needs more than the ceiling points to a sale.
- The current home is expensive to run. A large house’s property taxes, heating, and upkeep continue every month. A smaller place cuts them — a lasting saving no borrowing can match.
Staying put with a reverse mortgage tends to win when:
- Leaving was never really the plan. If the move would only ever be about money, the mortgage frees the money without the move — and without the $65,000 price of it.
- The amount needed is modest. Borrowing $100,000 to $150,000 costs less in interest for years than moving costs on day one. The bigger the moving bill and the smaller the need, the longer staying stays ahead.
- The house still fits the life in it. When the home works and the only problem is money, borrowing solves the money without giving up the home. When the house itself is the challenge — the stairs, the upkeep — what staying put actually costs is worth reading first, because adapting a home has a price too.
One more thing belongs in the weighing, and it is not financial. A retirement holds a limited number of healthy, active years — the ones with the energy for the trips, the projects, the grandkids.
Money freed now arrives while that energy is there. The same money freed by a move that keeps getting put off arrives later. Plenty of families weigh that timing more heavily than any number on this page — and they are not wrong to.
Neither list is a verdict. The full fit test — when a reverse mortgage makes sense and when it does not — is in is a reverse mortgage a good idea, and plans change: selling later is always allowed, and paying off a reverse mortgage early walks through exactly what that costs, year by year.
How do you decide between downsizing and a reverse mortgage?
Start one question earlier: what is the money for, and how much is actually needed? The answer decides most of it — a modest need favours staying, a need beyond the lending ceiling favours selling, and a move that is wanted anyway favours moving.
Then have both paths priced on your real numbers, side by side. That is a broker’s job, and it costs you nothing — the lender pays the broker.
An independent broker prices the reverse mortgage across every lender in Canada, prices the sale-and-buy path at its full cost, and says plainly when moving — or a HELOC, for households whose income passes the bank’s tests — is the better answer. A broker arranges those bank products too. Downsizing is one of seven routes, and the full list of alternatives covers the other six.
The practical first step is a free estimate — the staying-put number, worked out on your age and your home, with no cost and no credit bureau pulled.
The free guide below goes one layer deeper on the reverse mortgage itself: the real costs, how the four lenders differ, and when it is 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
Is it better to downsize or get a reverse mortgage?
Neither is better for everyone, and no page can settle it without knowing the full picture. Downsizing pays its costs once, and it suits a household that genuinely wants to move. A reverse mortgage charges interest over the years, and it suits a household that wants to stay. The deciding facts are the years ahead, the amount of money needed, and whether the move itself is wanted — a broker prices both paths on real numbers, for free.
How much does it actually cost to sell a house and buy another in Ontario?
On a typical example — selling for $900,000 and buying for $700,000 — about $65,000. That is realtor fees of about 5% plus HST on those fees, land transfer tax of $10,475 on the new home, and legal fees of about $1,800 on each of the sale and the purchase. Buying inside Toronto adds a second land transfer tax of the same size again, taking the total to about $75,400. The movers and the getting-ready costs sit on top.
Does downsizing leave more for my kids than a reverse mortgage?
Not automatically, in either direction. Moving takes a one-time slice out of what the family owns — about $65,000 on this page's example — before the smaller home is even paid for. A reverse mortgage balance grows over the years instead, but home values usually rise over the same years, and that growth offsets some or all of the interest. Canadian reverse mortgage borrowers keep about half of their home's value on average, even after many years. Which path leaves the larger estate depends on the years, the rates, and the housing market — it is a numbers question, not a rule.
Can you use a reverse mortgage to buy a home before your old one sells?
Yes, with one condition. Some lenders can cover both homes for the overlap when the new home has to be paid for before the old one sells. They need a firm sale on the old home first — a signed agreement with the buyer and any conditions already cleared, so the money is certain to arrive. An offer that could still fall through is not enough. It is arranged before making an offer, not after.
What if I want to move a few years after taking a reverse mortgage — am I stuck?
No. A reverse mortgage can be paid off at any time, and selling the home is how many of them end. Paying the whole balance off within the first few years carries an early-repayment charge — highest in year one, stepping down to about three months' interest, then away entirely. After those first years, selling and moving costs nothing extra. And if the mortgage ends because the last borrower passed away, the charge is zero at every lender.
Do most Canadians actually downsize in retirement?
No — far more people talk about it than do it. In an April 2026 RE/MAX Canada survey, just 16% of Canadians 65 and older said they expect to move to a smaller home within the next decade. Part of the reason is supply: 65% of the same group report low or no suitable smaller homes in their area. For most Canadian homeowners past 65, staying put is the plan.
See both paths priced on your actual home
Get a free, no-obligation estimate — what a reverse mortgage would unlock, what moving would really cost, and an independent read on which leaves you further ahead. No cost, no obligation, 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. Rates and lender details verified as of July 20, 2026.