Many Alberta retirees have a lot of their savings tied up in their home. Whether you live in Calgary, Edmonton, Red Deer, a smaller town or on an acreage, there may come a time when you need cash for repairs, health costs, helping family or simply day-to-day bills, without wanting to sell.
Two common ways to borrow against your home are a reverse mortgage and a home equity line of credit (HELOC). Both use your home equity, but they work very differently. With the Bank of Canada’s October 28, 2026 rate increase pushing up borrowing costs, it’s worth understanding both before you choose.
How a reverse mortgage works
A reverse mortgage is a loan for homeowners, usually aged 55 or older, that lets you borrow from your home equity without selling. According to the Financial Consumer Agency of Canada (FCAC):
- How much: you can usually borrow up to 55% of your home’s current value. The amount depends on your age (and the ages of others on title), your home’s type, condition and appraised value, and the lender.
- No regular payments. You don’t have to make payments while you live in the home, though many lenders let you pay down some of the balance if you want to.
- The balance grows. Interest is added to what you owe, so the total increases over time and your equity can go down.
- When it’s repaid: when you sell, move out, the last borrower dies, or you default.
- How you get the money: a lump sum, part up front and the rest over time, or regular payments. Taking it all at once means paying interest on the full amount from day one.
- Benefits: FCAC notes the money is tax-free and doesn’t affect Old Age Security (OAS) or the Guaranteed Income Supplement (GIS).
The home usually has to be your primary residence, and you must keep up your end of the agreement, such as paying property taxes and insurance and keeping the home in good repair. FCAC warns that defaulting can have serious consequences, including foreclosure.
The trade-offs: costs and your estate
- Higher rates. FCAC says reverse mortgage interest rates are usually higher than for a regular mortgage or a HELOC.
- Fees. Expect costs such as an appraisal, set-up, legal and closing fees, and a prepayment penalty if you pay it off early. Some fees may be added to your balance.
- Less for your estate. Because interest compounds on the balance, there may be less left for your children or other beneficiaries.
- Repayment deadlines. Your estate usually has a limited time to repay the loan, and settling an estate can take longer than that. Ask the lender exactly how long your estate would have.
- Existing debts. You may need to pay off any current mortgage or HELOC on the home, and you may not be able to have a HELOC at the same time.
Some lenders offer a “no negative equity guarantee”, usually subject to conditions, meaning you won’t owe more than your home’s fair market value. Ask any lender what protections apply, and get them in writing.
How a HELOC compares
A HELOC is a revolving line of credit secured by your home. You borrow what you need, repay it and borrow again, up to your limit. FCAC explains:
- Usually a lower rate than a reverse mortgage. Most HELOCs have a variable rate tied to the lender’s prime rate, which can change when the Bank of Canada changes its policy rate.
- Monthly payments are required. Your lender may ask for interest only, or interest plus some principal. If you only pay interest, the debt doesn’t go down.
- You have to qualify. A bank will check your income and credit and apply the stress test, so you need to show you can afford payments at a qualifying rate. That can be harder on a fixed retirement income.
- Limits: you can borrow up to 65% of your home’s value on the HELOC, and you need more than 35% equity for a standalone HELOC, or 20% for one combined with a mortgage.
- Risks: if rates rise, payments can become hard to manage, and if you don’t repay, you could lose your home.
For the full details, see our HELOC guide for Alberta homeowners.
Side by side
| Reverse mortgage | HELOC | |
|---|---|---|
| Who it’s for | Usually homeowners 55+ | Homeowners who qualify on income and credit |
| Regular payments | None required | Monthly payments required |
| How much (usual maximum) | Up to 55% of home value | Up to 65% of home value |
| Rate | Usually higher | Usually lower, often variable |
| Your balance | Grows as interest is added | Goes down only if you repay principal |
| Estate | Can leave less equity for heirs | Any balance is repaid when the home is sold |
Source: FCAC. Amounts, rates, fees and terms vary by lender and are not quoted here.
Alberta notes: city, town and rural homes
- Location and home value can matter. Some reverse mortgage lenders only lend in certain cities and towns, and some set a minimum home value. If you’re on an acreage or in a small community, options may be more limited. See rural and acreage mortgages in Alberta.
- Alberta has its own seniors’ home equity loans. The Government of Alberta offers low-interest home equity loans for eligible seniors 65 and older through the Seniors Home Adaptation and Repair Program (SHARP) for repairs and adaptations, and the Seniors Property Tax Deferral Program for property taxes. Neither requires monthly repayments, and both have eligibility rules (SHARP, for example, has an income limit). Note that both programs say a registered reverse mortgage must be removed before you can qualify, so check them before taking a reverse mortgage.
- Legal advice. FCAC notes some provinces require independent legal advice for a reverse mortgage. Even where it isn’t required, having your own lawyer review the documents is a good idea.
Other options to compare
FCAC suggests comparing alternatives before you choose a reverse mortgage, such as downsizing to a smaller home, renting, or another type of loan. If you still have a mortgage, a refinance or a change at renewal may also be worth a look, as long as you can qualify for the payments.
Questions to ask before you sign
- What is the total cost: the interest rate, all fees, and any prepayment penalty?
- How much would I owe in 5, 10 or 15 years if I make no payments?
- How long would my estate have to repay, and what happens if it takes longer?
- For a HELOC: what would my payment be if rates went up, and can I afford it on my retirement income?
- Do I need to pay off my current mortgage or line of credit first?
- What could cause a default, and what protections apply?
FCAC also suggests talking with your family and a financial advisor first, so everyone understands the impact on your home equity and your estate.
Talk it through first
Happy to walk you and your family through both options, wherever you are in Alberta, by phone or online. Call or text 403-438-0761, email johnantle@gopineapple.com, or book a time that suits you.
Quick question? Book 30 minutes. Want to go through everything? Book a full hour.
Every mortgage and line of credit is subject to lender approval, and amounts, rates and fees vary by lender.
John Antle, Sub Mortgage Broker - Team Lead, Pineapple National Inc.
General information only, not personalized financial or mortgage advice. Please speak with a licensed mortgage professional about your situation. Reverse mortgage and HELOC rates, fees, amounts and terms vary by lender and are not quoted here. Government program details are as checked on November 2, 2026 and can change. Every mortgage and line of credit is subject to lender approval (O.A.C.); approval and amounts are not guaranteed. Consider independent legal and financial advice, and talk it over with your family.
