You own a North Shore home worth a couple of million dollars, your income is lower than it used to be, and you want to unlock some of that equity. The two big options people weigh are a reverse mortgage (stay put, borrow against the house) and downsizing (sell, buy something smaller, pocket the difference). Here is how a reverse mortgage vs downsizing really compares, with real numbers.
Reverse Mortgage or Sell and Downsize?
If you want to stay in your home for the long haul and only need a modest amount of money, a reverse mortgage can work. If you need a large sum, want to protect what you leave to your family, or your house is already more than you need, downsizing almost always leaves you with more money and more flexibility.
The simple way to think about it:
- A reverse mortgage lets you keep the house and pay nothing monthly, but the balance grows every year at around 6.4% to 7% right now, and it can roughly double in 10 to 11 years.
- Downsizing costs you around 4% to 5% of the sale price in one hit (commission, transfer tax, legal, moving), but the equity you free up is yours, debt free, and it can keep growing instead of shrinking.
- There is a third route many North Shore owners never hear about: deferring property taxes and using a small HELOC, which keeps costs lower than a reverse mortgage if you only need a little breathing room.
If you are unsure which camp you fall into, the first number you need is what your home would sell for today. Everything else is built on that.
How a Reverse Mortgage Works in BC and What It Costs
A reverse mortgage is a loan secured against your home that you do not make payments on. The interest is added to the balance, and the whole thing is repaid when you sell, move out for good, or pass away. You keep title and you stay in the house.
In BC there are two main lenders: HomeEquity Bank (the CHIP Reverse Mortgage) and Equitable Bank. To qualify, every owner on title has to be at least 55 and the home has to be your principal residence.
Here is what it costs as of late summer 2026:
| Cost | Typical amount |
|---|---|
| Interest rate, 5 year fixed (new client special) | about 6.39% |
| Interest rate, 5 year fixed (posted, applies at renewal) | about 6.99% |
| Variable rate | about 6.86% |
| Closing and admin fee (CHIP) | $1,795, usually added to the loan |
| Appraisal | a few hundred dollars |
| Independent legal advice | about $800 to $1,500 |
| Prepayment penalty | highest in the early years, then steps down |
For context, a regular 5 year fixed mortgage is running closer to 4% to 4.5% right now. So you are paying roughly 2 to 2.5 percentage points more for the convenience of never making a payment.
Two things people miss. First, the special rate usually applies only to your first term. When it renews, you move to the posted rate. Second, closed reverse mortgages carry prepayment penalties, so if you take one and then decide to sell in three years, you may pay to get out.
How Much You Can Actually Borrow at 65, 70 and 75
The headline you see in ads is “up to 55% of your home’s value.” In reality, that top number goes to older borrowers in high value homes. The amount you qualify for depends mainly on the age of the youngest owner, the value of the home, and where it is.
Approximate ranges for a North Shore home appraised at $2.1 million:
| Youngest owner’s age | Rough share of value | On a $2.1M home |
|---|---|---|
| 55 | 15% to 20% | $315,000 to $420,000 |
| 65 | 25% to 35% | $525,000 to $735,000 |
| 70 | 30% to 40% | $630,000 to $840,000 |
| 75 | 40% to 50% | $840,000 to $1,050,000 |
These are ballpark figures. The lender sets the real number after an appraisal, and any existing mortgage has to be paid off out of the reverse mortgage first. If you still owe $300,000 on your home, that comes off the top.
The Compounding Problem: What the Balance Looks Like After 10 and 15 Years
This is the part that decides it for most people. Because you make no payments, you pay interest on your interest. At 6.4% to 7%, the balance roughly doubles every 10 to 11 years.
Say a couple at 70 borrows $400,000 on their $2.1 million Edgemont home:
| Years later | Balance at 6.39% | Balance at 6.99% |
|---|---|---|
| Start | $400,000 | $400,000 |
| 5 years | about $550,000 | about $567,000 |
| 10 years | about $757,000 | about $803,000 |
| 15 years | about $1,040,000 | about $1,138,000 |
So a $400,000 loan can become over $1 million by the time they are 85. If the home grows at around 3% a year, it would be worth roughly $3.27 million after 15 years, which leaves plenty of equity. But if prices go flat for a few years (like the dip we have seen through 2025 and 2026), a bigger slice of the house goes to the bank.
The good news: CHIP and Equitable both guarantee you will never owe more than the home is worth when it sells, as long as you keep up with property taxes, insurance and maintenance. The less good news: every dollar of interest is a dollar that does not go to you or your kids.
What Downsizing Frees Up on the North Shore: A Real $2.1M to $1.1M Example
Now the other side. Say the same couple sells their detached home for $2.1 million and buys a two bedroom condo or a townhome for $1.1 million in Lonsdale or Lynn Valley.
| Item | Amount |
|---|---|
| Sale price | $2,100,000 |
| Realtor commission (7% on first $100K, 2.5% on the rest, plus GST) | about $59,850 |
| Legal on the sale | about $2,000 |
| Purchase price of the condo or townhome | $1,100,000 |
| Property Transfer Tax on $1.1M | $20,000 |
| Legal on the purchase | about $2,000 |
| Moving and setup | about $6,000 |
| Cash freed up, tax free, no debt | about $910,000 |
That $910,000 is theirs. It can go into investments, help the kids with a down payment, or sit as a safety net. There is no interest clock running, and if the sale is their principal residence, there is no capital gains tax on the profit either.
The costs are real: roughly $90,000 in total transaction costs on this move. But compare that with the reverse mortgage, where $400,000 borrowed can cost more than $400,000 in interest over 15 years.
Downsizing has its own trade offs, of course. You leave a home you love, the new place may have strata fees ($400 to $900 a month is common for a North Shore condo), and moving at 70 is a lot of work. If you are leaning this way, our guide to downsizing in North and West Vancouver walks through the house to condo move step by step.
Reverse Mortgage vs Downsizing Side by Side: Equity, Monthly Cost, Estate, Flexibility
| Reverse mortgage | Sell and downsize | |
|---|---|---|
| Stay in your current home | Yes | No |
| Monthly payment | None | None, but strata fees likely |
| Upfront cost | about $3,000 to $4,000 | about 4% to 5% of the sale price |
| Cash available | 25% to 50% of value depending on age | Most of the difference between the two prices |
| Interest cost | Grows every year, compounding | None |
| Estate left to your family | Shrinks over time | Kept, and can grow |
| Flexibility to change plans | Limited by prepayment penalties | Full, you own the cash |
| Risk if prices stall | Your equity share drops faster | Lower, you already cashed out |
| Best for | Staying put, needing a moderate amount | Needing a large sum, or already in too much house |
In plain terms, the reverse mortgage vs downsizing choice comes down to this: the reverse mortgage buys you the ability to stay. Downsizing buys you money and freedom. Which one you want more is the real question.
The Third Option Most People Miss: Property Tax Deferment Plus a HELOC
Some homeowners do not need $400,000. They need $1,000 to $2,000 a month of breathing room. For them, a much smaller tool can do the job.
BC Property Tax Deferment. If you are 55 or older, the province will pay your annual property tax for you as a low cost loan against your home, repaid when you sell. You need at least 25% equity. Heads up: the rules changed for 2026. Newly deferred taxes now cost prime plus 2% (about 6.45% today) with monthly compounding, instead of the old prime minus 2% simple interest. Taxes deferred for 2025 and earlier keep the old rate. It is less of a bargain than it used to be, but on a $6,000 tax bill it is still a small, flexible loan. The province lists the full rules on its property tax deferment program page.
A HELOC. A home equity line of credit lets you borrow up to 65% of your home’s value at around prime plus 0.5% (roughly 4.95% right now), and you only pay interest on what you use. The catch: you have to qualify on your income and pass the mortgage stress test for BC borrowers, and you do have to make at least interest payments each month.
Put together, deferring $6,000 of property tax a year and drawing $1,000 a month from a HELOC costs far less than a large reverse mortgage, and you keep most of your options open.
| Option | Rough cost today | Monthly payment | Income needed to qualify |
|---|---|---|---|
| Reverse mortgage | 6.4% to 7%, compounding | No | No |
| Property tax deferment | prime plus 2%, compounding | No | No |
| HELOC | about prime plus 0.5% | Yes, interest at least | Yes |
Frequently Asked Questions
Can I get a reverse mortgage if I still have a mortgage?
Yes. The reverse mortgage pays off the existing one first, and you get the rest. If the existing balance is large, there may not be much left over.
Will my kids have to pay back the reverse mortgage?
No, not out of their own pocket. It is repaid from the sale of the home. If the balance ever exceeds the sale price, the lender absorbs the gap, as long as the loan terms were followed.
Do I pay tax on reverse mortgage money?
No. It is a loan, not income, so it does not affect your taxes, OAS or GIS.
Can I sell my home later if I take a reverse mortgage?
Yes, but you repay the balance plus any prepayment penalty from the sale. Penalties drop over time and are usually waived on death.
How long does downsizing usually take on the North Shore?
Most moves take three to six months from the first valuation to moving day. Selling and buying in the right order matters, and our guide on whether to buy first or sell first on the North Shore covers the timing.
Is the money I get from selling my home taxable?
Not if it was your principal residence for every year you owned it. The principal residence exemption covers the gain in full.
Can a couple get a reverse mortgage if only one of us is 55?
No. All owners on title must be at least 55 for the main programs in BC.
What happens if one spouse moves into long term care?
The loan stays in place as long as the other spouse lives in the home. Once the last borrower moves out permanently, the home is usually sold.
Is downsizing always cheaper than a reverse mortgage?
Over five years or more, almost always, because you avoid compounding interest. Over a very short stay, the transaction costs of moving can be higher.
Weighing These Options? Let’s Start With What Your Home Is Worth Today
Every number in this article comes back to one figure: what your home would actually sell for right now. A reverse mortgage lender will use an appraisal, a downsizing plan depends on the sale price, and a HELOC limit is set by value too.
Navid Hakimi works with North Shore homeowners at exactly this stage. He can give you a clear, no pressure free valuation of your home, show you what similar condos and townhomes are selling for in the areas you would consider, and help you see the real numbers side by side before you talk to a lender. If staying put turns out to be the better call, that is a perfectly good outcome too. Book a confidential chat with Navid to talk it through.
Rates, fees and program rules current as of September 2026 and change often. This is general information, not financial, tax or legal advice. Always get independent legal advice before signing a reverse mortgage.
