When it's a bad idea to get a reverse mortgage - Ingrid Bjel McGaughey - Mortgage Broker
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I'm a Toronto-based Mortgage Broker. My focus: to mentor and educate first-time home buyers, people with less-than-perfect credit, and people in business for themselves, to make the best mortgage choices for them.
When it’s a bad idea to get a reverse mortgage
Who should not get a reverse mortgage?
Reverse mortgages are often misunderstood. Some people think they’re a last resort. Others think they’re a scam designed to rip you off. The truth is simpler and much less dramatic: a reverse mortgage can be an excellent financial tool, but only in the right situation. Just as important as knowing when one does make sense is knowing when it doesn’t.
If you or your parents are homeowners aged 55+ in Canada, there are a few situations where a reverse mortgage may not be the best fit.
🎥 Watch: who should not get a reverse mortgage (98 seconds)
In some situations, a reverse mortgage is the best option; in others, it’s simply one of many
1. If you’re planning to sell or downsize soon
If you expect to sell soon, whether to downsize, move closer to family, or relocate, a reverse mortgage may not make sense for you. Reverse mortgages are designed as a long term tool. While it is possible to port the reverse mortgage to a new property, it’s important to run the numbers to ensure that the benefits of a reverse mortgage outweigh other potential solutions that may work better in your situation.
👉 If you aren’t being forced to sell, it’s important to evaluate your financial needs in the context of your upcoming lifestyle changes to ensure you choose the best option.
2. If your cash flow is more than sufficient to cover the costs of alternatives
A reverse mortgage is used to access equity in your home without adding monthly costs to your budget. If your pension income and other income sources can comfortably cover payments on a traditional mortgage or a HELOC, these might be more cost effective ways to access your home euqity.
👉 A mortgage game plan evaluating your potential options and the costs of each can help you make an informed decision on which way you should go.
3. If you need more money than you qualify for with a reverse mortgage
With a reverse mortgage, you can access up to 59% of the value of your home, depending on your age, property location, and property type. If you need more than what you qualify for with a reverse mortgage, we need to work on other options that can be used to meet your financial needs.
👉 A review of your financial options can highlight better alternatives to help you access your home equity.
4. If you need funds for a short term financial need
Reverse mortgages are designed for people who want to stay in their home long-term. If you need funds to cover a short term financial gap, it may make sense to look at other tools to achieve your needs.
Depending on credit, income, and goals, alternatives may include:
👉 The key is comparing all options — not defaulting to one solution.
5. If no one has explained the full picture
This is a big one.
If someone has pitched a reverse mortgage without clearly explaining:
…that’s a red flag.
👉 A reverse mortgage should never feel rushed, confusing, or one-sided.
The bottom line
A reverse mortgage isn’t “good” or “bad.” It’s a financial tool for specific situations.
When it’s right, it can:
When it’s wrong, it can simply be the wrong tool for the job.
That’s why the mortgage planning conversation matters more than the product.
Let’s talk
If you’re exploring a reverse mortgage — or wondering whether you should rule it out entirely — the smartest first step is a no-pressure conversation.
I help homeowners understand when a reverse mortgage makes sense, when it doesn’t, and what else to consider so you can move forward with confidence.
👉 Let’s talk! If you’re in Toronto, Etobicoke, Oakville, or elsewhere in the GTA, I’m here to chat about your financial options.
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