What happens to a reverse mortgage when you sell, move, or pass away

The events that trigger repayment

Repayment is due when the last surviving borrower sells the home, moves out permanently including into long-term care, or passes away. Nothing is demanded while you continue to live in the home and meet the basic obligations of taxes, insurance, and maintenance.

How the estate handles it

The estate typically has around 180 days to repay, though timelines vary by lender. Heirs generally choose one of three paths: sell the home and pay the loan from the proceeds, refinance the property with a conventional mortgage and keep it in the family, or pay the balance from other estate assets.

• Sell the home and pay the balance from proceeds
• Refinance into a regular mortgage to keep the property
• Repay from other estate funds
• Remaining equity flows to the estate

The no negative equity guarantee

Canadian reverse mortgage lenders provide a no negative equity guarantee. Provided you meet the loan obligations and the home is sold at fair market value, neither you nor your estate will ever owe more than the sale price. The lender absorbs any shortfall.

Talk to the family early

Nearly every difficult conversation about reverse mortgages happens after the fact. Telling adult children how the loan works, what the current balance is, and what the plan for the property is removes almost all of the friction later. A short conversation now saves an estate a great deal of stress.

Frequently asked questions

Can my children keep the house?

Yes, provided they repay the loan, usually by refinancing the property with a conventional mortgage.

What if one spouse moves into long-term care?

As long as one borrower still lives in the home as their principal residence, the loan is not called.

Is the interest tax deductible?

Generally not for personal use, but it can be when the funds are used to earn investment income. Confirm with your accountant.