Helping Your Parents Stay at Home: Reverse Mortgage or HELOC?

Caring for aging parents can be both rewarding and challenging — especially when it comes to making sure they can stay comfortable and independent in their own home. Many families find that even after years of careful planning, the rising cost of living and unexpected healthcare expenses can stretch retirement budgets thin.

If your parents own their home, they may have built up significant home equity — a valuable resource that could help cover costs and ease financial stress. Two common options families explore are a Home Equity Line of Credit (HELOC) and a Reverse Mortgage.

Let’s look at how each works, and which might make sense for your family’s situation.

The Growing Costs of Aging at Home

Even with Canada’s strong public healthcare system, many older adults face extra expenses such as:

· Home maintenance and property costs – Utilities, property taxes, and repairs can add up, especially as a home ages.

· Health and home-care needs – Personal support workers, meal delivery, transportation, and home modifications (like ramps or stairlifts) often aren’t fully covered.

· Desire to stay home – The majority of older Canadians want to remain in their home and community as long as possible. According to HomeEquity Bank, 95% of adults aged 45+ say they’d prefer to age in place.

These are all important — but they can be expensive. That’s why exploring your parents’ home equity may be worth considering.

Option 1: Home Equity Line of Credit (HELOC)

A HELOC works like a flexible line of credit secured by the home. Your parents can borrow only what they need, when they need it, and repay it as they go.

However, qualifying for a HELOC usually requires showing enough ongoing income, and regular monthly payments are mandatory. For retirees living on fixed income, that can sometimes be difficult to manage.

Option 2: Reverse Mortgage

A Reverse Mortgage allows homeowners aged 55+ to access some of their home’s value without selling or making monthly payments. The money can be received as a lump sum or in scheduled installments — whichever best suits their needs.

The homeowner keeps full ownership of the property and continues to live there. If the home’s value increases, that equity growth is theirs to keep. And even if the housing market declines, they’ll never owe more than the home is worth.

Funds from a reverse mortgage are considered loan proceeds, not income, which means they won’t affect government benefits such as OAS or GIS.

Families often use this option to:

· Pay for home-care or medical expenses

· Make the home safer and more accessible

· Reduce financial stress

· Avoid dipping into retirement investments or savings

Common Myths About Reverse Mortgages

Reverse mortgages are often surrounded by misconceptions. Here are a few of the most common ones:

1. “You’ll lose your home”. Nope! You keep full ownership of your home – the reverse mortgage is just a loan that uses your home equity as security.

2. “The fees are outrageous”. While interest rates are typically a bit higher than regular mortgages, the overall fees are pretty comparable to other home loans. Plus, rates have been dropping lately and are expected to continue.

3. “The paperwork is a nightmare”. It’s basically like getting a regular mortgage – you’ll need a home appraisal and proof you can handle property taxes and maintenance. The only extra step is meeting with an independent lawyer to make sure you understand everything.

4. “Miss a payment and you’re out”. Here’s the best part – there are no regular payments to miss! You can live in your home for the rest of your life without paying a dime. The loan is paid off when you sell your home or through your estate when you pass away.

5. “Once you’re in, you’re stuck forever”. Not true! You can pay it off early if you want to. There might be some prepayment charges (like with regular mortgages), but these can be reduced if you’re moving into long-term care.

6. “It’s only for desperate people”. Think of a reverse mortgage as a smart financial tool. Many people use reverse mortgages to boost their retirement lifestyle or tackle their financial goals.

Choosing What’s Best for Your Parents

Deciding between a HELOC and a reverse mortgage depends on a few key factors:

· Your parents’ income and ability to make payments

· How long they plan to stay in their home

· Their overall financial and health situation

Every family’s circumstances are different. Speaking with a trusted mortgage advisor or financial professional who understands retirement and caregiving challenges can help you explore the best fit for your parents’ goals.

Supporting Independence and Peace of Mind

For many families, using home equity is one way to help older parents stay safe, comfortable, and independent — in the place they love most.

If you’d like to learn more about how these options work or want help understanding what might suit your parents’ situation, reach out to a licensed mortgage professional or financial advisor experienced in retirement planning.

The Boom Health app allows users to book registered nurses, personal support workers, and personal care services, schedule transportation, order prepared meals, rent or purchase medical equipment, and get emergency assistance. Download the app from the App Store or Google Play Store.

This article is not intended to be a substitute for professional medical advice or diagnosis. Always seek the advice of your physician or another qualified health provider with any questions you may have regarding a medical condition.