More BC homeowners are carrying a mortgage, a line of credit or credit card debt into retirement. When a pension has to cover those payments, every month gets tight. Paying the debt off with a reverse mortgage is one of the most common reasons people look at one.
How it works
A reverse mortgage pays out any mortgage or other debt registered on your title first, and lenders may require some unsecured debts to be paid from the proceeds too. After that, there are no required monthly payments on most products. Interest is added to the balance instead.
Say you owe $150,000 on a mortgage and pay about $1,000 a month. A reverse mortgage pays it out, and that $1,000 a month stays in your pocket. The trade-off: the $150,000 plus about $4,000 in costs now grows at an illustrative 7% compounded twice a year, to about $217,000 after 5 years and $306,000 after 10 if nothing is paid. Illustration only, not a quote.
When it makes sense
- The payments are the problem, not the balance.
- Your income will not qualify you for a renewal, refinance or HELOC on good terms.
- You plan to stay in the home for the long term.
- You have a plan to stop new debt from building up again.
When something else is smarter
- If you can comfortably make payments, a regular refinance or HELOC is usually cheaper.
- If the debt is small, consider paying it down from savings or with family help.
- If you were planning to move in a few years, selling may be cleaner, since reverse mortgages often have prepayment charges in the early years.
Renewal coming up?
If your mortgage renews soon and the new payment does not fit your budget, start looking at options a few months before the renewal date. That gives time to compare a renewal, a refinance, a HELOC and a reverse mortgage side by side, rather than signing whatever arrives in the mail.
Questions people ask
Can a reverse mortgage pay off my existing mortgage?
Yes. Any mortgage on title is paid out first from the proceeds, and you receive what is left, subject to approval.
Do I have to pay off my credit cards too?
Lenders may require some unsecured debts to be paid from the proceeds or savings, depending on the file. Ask during the application.
Is it cheaper than my current mortgage?
Usually not. Reverse mortgage rates are typically higher. The benefit is no required monthly payments, which matters most when cash flow is the problem.
About the author
Matt Blake is a licensed mortgage broker in British Columbia with BRX Mortgage Inc. He helps homeowners 55 and over, and their families, compare reverse mortgages with HELOCs, selling and downsizing, and he will tell you straight when a reverse mortgage is the wrong move.
Licence MB600487 · BRX Mortgage Inc., brokerage licence X301291 · Last reviewed October 2026
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