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Reverse Mortgage vs. Selling Your Home: What Canadians Need to Know

Should you sell your home or get a reverse mortgage? A detailed cost comparison for Canadian homeowners considering their options.

Reverse Mortgage vs. Selling Your Home: What Canadians Need to Know
Reverse Mortgage Centre•Feb 15, 2026
6 minute read

For Canadian homeowners aged 55 and older who need access to their home equity, the question often comes down to two options: sell the home or get a reverse mortgage. Both unlock equity — but the costs, lifestyle impact, and financial outcomes are very different.

The True Cost of Selling Your Home

Selling a home in Canada is expensive. Most homeowners underestimate the total cost because they focus on the sale price and forget the transaction costs that eat into their equity:

Real Estate Commission

The standard commission in Canada is 4% to 5% of the sale price (split between the listing and buyer’s agents). On a $700,000 home, that is $28,000 to $35,000 — plus HST/GST in most provinces.

Land Transfer Tax (on the new home)

If you are downsizing and buying a smaller property, you will pay land transfer tax on the purchase. In Ontario, land transfer tax on a $400,000 condo is approximately $4,475. In Toronto, there is an additional municipal land transfer tax, effectively doubling the cost. In BC, the property transfer tax on $400,000 is $6,000.

Budget $1,500 to $3,000 for legal fees on the sale of your current home, plus another $1,500 to $2,500 on the purchase of a new one.

Moving Costs

A full-service local move costs $2,000 to $5,000. A long-distance move can cost $5,000 to $15,000 or more depending on distance and volume.

Home Preparation and Staging

Painting, repairs, decluttering, staging, and professional photography can cost $3,000 to $10,000.

The Total

On a $700,000 home sale with a $400,000 condo purchase, the total transaction costs can easily reach $50,000 to $75,000. That is equity you lose to the process of selling — not to a reverse mortgage.

The Cost of a Reverse Mortgage

A reverse mortgage has its own costs, but they are structured differently:

  • Setup fees: Range from $995 (Equitable Bank) to approximately $2,995 (CHIP) depending on the lender and product.
  • Independent Legal Advice: $300 to $700. This is a mandatory requirement for all Canadian reverse mortgages.
  • Appraisal fee: $300 to $500 (some lenders cover this).
  • Interest: This is the primary ongoing cost. Interest compounds semi-annually and is added to the loan balance. Over time, this is the most significant cost of a reverse mortgage.

Use our cost estimator to see the all-in setup costs by lender, and our amortization calculator to project how the balance grows over time.

Side-by-Side Comparison

Here is a realistic scenario comparing the two options for a 70-year-old homeowner in Ontario:

Scenario: Home worth $700,000, no existing mortgage, needs $150,000.

Selling & DownsizingReverse Mortgage
Access to $150,000Sell home, buy $400K condo, pocket differenceBorrow $150K against home
Upfront costs~$60,000 (commissions, tax, legal, moving)~$3,000 (setup, legal, appraisal)
Ongoing costsNew condo fees ($400–$800/mo)Interest compounds (~6.5–7.0%)
Monthly paymentNone (after purchase)None
Stay in your homeNo — you must moveYes
Impact after 10 years$150K accessed, minus $60K in costs$150K loan grows to ~$290K
Remaining equity~$400K condo + cash~$700K home (with appreciation) minus ~$290K

The math shows that selling costs you a large amount upfront and forces a move, while a reverse mortgage costs more over time through interest but lets you stay in your home. Neither option is universally better — it depends on your priorities.

When Selling Makes More Sense

Selling may be the better choice if:

  • You want to move — to a different city, a warmer climate, or closer to family
  • Your home requires major repairs you cannot afford (new roof, foundation work, complete renovation)
  • You are unable to maintain the home safely (snow removal, stairs, large yard)
  • Your home is much larger than you need and the carrying costs (heat, taxes, maintenance) are burdensome
  • You need access to most or all of your home equity — more than a reverse mortgage would provide

For a full analysis of downsizing costs, read our alternatives guide.

When a Reverse Mortgage Makes More Sense

A reverse mortgage is likely the better choice if:

  • You want to stay in your home — this is the most important factor
  • You need a portion of your equity (15% to 55%), not all of it
  • You want to avoid the disruption and emotional cost of selling and moving
  • You cannot pass the income qualification required for a HELOC or conventional refinancing
  • You want to keep your OAS, GIS, and CPP benefits intact — reverse mortgage funds are not taxable income
  • You want to age in place and fund home modifications or in-home care

The Emotional Factor

Numbers do not capture everything. For many Canadians, their home is more than a financial asset. It is where they raised their children, where their memories live, where their community is. The emotional cost of selling can be enormous — and it is a cost that does not show up in any spreadsheet.

A reverse mortgage lets you access equity while keeping the home that matters to you. That peace of mind has real value, even if it is hard to quantify.

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