What Happens to a Reverse Mortgage When You Sell or Move?

One of the most common questions about reverse mortgages is simple: what happens when it is time to leave? Whether you sell your home, move to a care facility, or your circumstances change, here is exactly how repayment works in Canada.

The Basic Rule: Repayment Triggers

A Canadian reverse mortgage becomes due when any of the following occurs:

1. You sell the home.
2. You move out permanently (for example, to a long-term care facility, a retirement residence, or a family member’s home).
3. The last surviving borrower passes away.
4. You default on the loan conditions (failing to pay property taxes, maintain homeowner’s insurance, or keep the property in reasonable condition).

As long as none of these triggers occur, the loan continues indefinitely. There is no fixed term or maturity date. You can live in your home for 5, 10, 20, or more years without making a single payment.

What Happens When You Sell

When you sell your home, the reverse mortgage is repaid from the sale proceeds — just like any other mortgage. Your lawyer handles this at closing:

1. The buyer’s funds are received by the lawyer.
2. The reverse mortgage balance (principal plus accrued interest) is paid to the lender.
3. Any remaining equity is yours.

For most Canadian homeowners, there is significant equity remaining after repayment — especially if the home has appreciated. Use our equity projection calculator to see how much equity you could expect to retain after 5, 10, or 15 years.

Prepayment Penalties

If you sell before your term is up, you may owe a prepayment penalty. This varies by lender:

• CHIP: Penalties apply during the term. CHIP Open has no penalty within the first 6 months.
• Equitable Bank: Standard prepayment charges apply, similar to conventional mortgages.
• Bloom: Prepayment terms vary by product. Their Standard product allows interest-only payments at any time.
• Home Trust: Prepayment terms are comparable to other lenders.
• Fraction: Has a different structure as a shared-appreciation product — early repayment terms are unique.

If you think you may sell within the next few years, discuss prepayment options with your broker before choosing a lender.

What Happens When You Move to Care

If you move to a long-term care facility or retirement home permanently, the reverse mortgage becomes due. However, “permanently” is the key word:

• Temporary absences (a hospital stay, rehabilitation, or a vacation) do not trigger repayment.
• Extended absences may be accommodated — some lenders allow up to 12 months of absence before considering it permanent, depending on circumstances.

If your spouse or partner remains in the home, the loan does not become due. It continues as normal until both borrowers have permanently left the property.

When the move is permanent, repayment works the same as a sale — the home is typically sold, and the loan is repaid from the proceeds. The estate or the borrower’s power of attorney handles this process.

What Happens When the Borrower Passes Away

When the last surviving borrower passes away, the estate has a window — typically 6 to 12 months — to repay the loan. This can be done by selling the home (the most common approach), having the heirs repay the loan from other assets and keep the home, or refinancing into a conventional mortgage (if the heirs qualify).

The no-negative-equity guarantee ensures that the estate will never owe more than the fair market value of the home. If the loan balance exceeds the home’s value (rare, but possible in a severe market downturn), the lender absorbs the loss.

For a detailed look at what heirs can expect, read our estate impact guide and our inheritance impact page.

Can You Port a Reverse Mortgage to a New Home?

In some cases, yes. If you are selling your current home and buying a new one (for example, downsizing to a smaller home in the same city), some lenders may allow you to port the reverse mortgage to the new property. This means transferring the existing loan to the new home without triggering full repayment and penalties.

Portability is not universal — it depends on the lender, the new property’s value and type, and your province. Ask your broker about this option if you are planning to move but want to keep a reverse mortgage.

Protecting Yourself: Key Questions

Before committing to a reverse mortgage, make sure you understand:

• What are the prepayment terms? Our lender comparison shows prepayment flexibility by lender.
• How fast will the balance grow? Use our amortization calculator to see year-by-year projections.
• How much equity will remain? Our equity projection calculator models different appreciation scenarios.
• What are the total setup costs? Our cost estimator breaks down fees by lender.

Understanding the exit strategy is just as important as understanding the entry. A licensed reverse mortgage broker can walk you through every scenario and help you plan for whatever comes next.

For the full application process from start to finish, see our step-by-step guide.