For Canadians aged 55 and over, managing a traditional mortgage in retirement can be increasingly difficult — especially as interest rates rise and fixed terms expire. Many homeowners who secured low rates during the COVID-19 pandemic are now facing significantly higher monthly payments as their five-year fixed mortgages come due. For those looking to stay in their home and reduce financial stress, the CHIP Reverse Mortgage from HomeEquity Bank offers a compelling alternative.
The COVID-Era Mortgage Boom — and What Comes Next
Between 2020 and 2021, interest rates in Canada dropped to historic lows. According to the Bank of Canada, the overnight rate was reduced to 0.25% in March 2020 and remained there until early 2022. This led to a surge in five-year fixed mortgages, often locked in at rates between 2% and 3%.
Fast forward to 2025, and those same mortgages are now renewing at rates closer to 5.5% or higher. For many older Canadians, this shift means monthly payments are doubling or even tripling, placing unexpected pressure on retirement budgets.
A Real-World Example: How Payments Have Changed
Consider a homeowner who took out a $500,000 mortgage in 2020 at a fixed rate of 2.25% over five years and an amortization period of 25 years. Their monthly payment would have been approximately $2,180.
Now, in 2025, that same mortgage renewed at 5.5%, with the same amortization period and home value. The new monthly payment? Roughly $3,060 — an increase of $880 per month, or over $10,000 annually.
For retirees on fixed incomes, this kind of increase can be difficult to absorb. It may mean cutting back on essentials, dipping into savings, or reconsidering long-term plans.
How the CHIP Reverse Mortgage Can Help
The CHIP Reverse Mortgage allows Canadians aged 55+ to refinance their existing mortgage without the burden of monthly payments. Instead of replacing one loan with another, the reverse mortgage uses your home equity to pay off the remaining balance of your traditional mortgage. You continue to own your home, and repayment is only required when you move, sell, or pass away.
This approach can be especially helpful for those who:
- Locked in low rates during COVID and now face higher renewals
- Want to eliminate monthly payments to improve cash flow
- Prefer to stay in their home rather than downsize
As outlined by the Canadian Government, reverse mortgages are regulated and designed to protect homeowners, ensuring you never owe more than your home’s fair market value.
Unlocking Equity Without Selling
Refinancing with a reverse mortgage doesn’t mean giving up your home. In fact, it’s a way to stay in the home you love, while accessing the equity you’ve built over decades. The funds can be used to pay off your mortgage, cover living expenses, or support your retirement lifestyle.
A recent article in The Globe and Mail highlights the growing popularity of reverse mortgages in Canada, noting that older homeowners are increasingly using them to manage debt and avoid selling in a high-cost housing market.
Is It Right for You?
The CHIP Reverse Mortgage is available to Canadians aged 55+, and eligibility is based on your age, home value, and location. You can use the our free calculator to estimate how much you could qualify for.
For a deeper look at how reverse mortgages compare to traditional refinancing, HomeEquity Bank’s guide to refinancing with a reverse mortgage offers valuable insights.
What Mortgage Experts Are Saying
Industry leaders like Ratehub.ca have noted that reverse mortgages are becoming a mainstream option for older Canadians. Their guide explains how they can be used to pay off existing debt, improve cash flow, and avoid selling in a volatile market.
Meanwhile, Global News reports that reverse mortgage volumes in Canada have grown steadily over the past five years, driven by rising home values and increased awareness of alternative retirement financing options.
Final Thoughts
If your five-year mortgage is coming due and you’re facing higher payments, the CHIP Reverse Mortgage offers a way to refinance without monthly obligations. It’s a solution designed for Canadians 55+ who want to stay in their home, unlock equity, and enjoy retirement with greater financial freedom.
To learn more get your FREE GUIDE and find out if a CHIP Reverse Mortgage is right for you
