Here's the direct answer: a reverse mortgage in Ontario typically costs $995 to $4,000 upfront in fees (appraisal, legal advice, and a lender setup fee), plus an interest rate that's usually a couple of points higher than a conventional mortgage, currently somewhere in the 6.5% to 9% range (as of September 2026) depending on the lender and term. There's no monthly payment required, so the real cost to understand isn't just the fees at signing, it's how interest builds on the balance over time. Let's break down each piece honestly.
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The Three Kinds of Cost You're Actually Paying
It helps to separate these, because they behave differently:
- Upfront costs — paid once, at closing (appraisal, legal advice, lender setup fee).
- Ongoing costs — the interest that accrues on your balance during the period you hold the mortgage, since there are no required monthly payments to offset it.
- Exit costs — what it costs to close things out, whether that's at the end of the loan or if you repay early.
Most homeowners fixate on the upfront number. The one that actually matters most over the life of the loan is the second one.
Upfront Fees: What Ontario Lenders Actually Charge
Here's where the fees land across the lenders active in Ontario:
| Fee | Equitable Bank | CHIP (HomeEquity Bank) | Bloom |
|---|---|---|---|
| Lender setup fee | $995 | $1,795 (standard) | ~$1,650 |
| Appraisal | $300–$600 | $300–$600 | ~$350 |
| Independent Legal Advice (ILA) | $300–$800 | $300–$700 | $300-$700 |
| Rough total upfront | ~$1,600 - $2,200 | ~$2,400 - $3,100 | ~$2,300 - $2,700 |
A few things worth flagging: CHIP's "Open" product (the version that lets you repay in full anytime without penalty) carries a higher closing cost, $2,995 or 1.25% of the loan amount, whichever is greater, because that flexibility has a premium. HomeTrust's fees vary by product and aren't as consistently published, so ask for a written breakdown before comparing. And the ILA fee goes to a lawyer of your choosing, not the lender's, it's for your protection, not theirs.
Also Read: Mortgage Broker vs. Bank for Canadian Reverse Mortgages
Most of these fees can be deducted from your loan proceeds rather than paid out of pocket, which is worth knowing if cash on hand is part of the concern that brought you here in the first place. Some lenders describe their total closing costs as a percentage instead of a flat number, which is the same math, just framed differently. Either way, it's worth asking your specialist to convert one framing into the other so you're comparing apples to apples across lenders.
One Thing You Might Read Elsewhere That Isn't Quite Right
Some lender content compares reverse mortgage fees to the cost of a regular home purchase, including land transfer tax, to make the numbers look comparable. Here's the honest correction: land transfer tax applies when you're buying a property, not when you're taking out a reverse mortgage on a home you already own. It doesn't apply on a property you already own. If you see it listed as a reverse mortgage cost, that's a sign the comparison is stretching to make the fees look more "normal" than they need to. The only exception is if you are using a reverse mortgage to purchase a property.
Also Read: Is a Reverse Mortgage a Good Idea in Canada?
What the Interest Actually Costs You Over Time
This is the part that's easy to gloss over. Because you're not making monthly payments, interest doesn't get paid down, it gets added to your balance, and then next month's interest is calculated on that new, slightly larger balance. Most lenders compound this twice a year.
Here's an illustrative example, not a quote for your specific situation: on a $100,000 balance at roughly 6.5% interest, the first year adds somewhere around $6,700 to what you owe. That percentage effect continues every year you hold the mortgage, which is exactly why the total cost of a reverse mortgage depends heavily on how long you keep it and how much you draw upfront versus over time.
This isn't a reason to avoid one. It's a reason to borrow only what you actually need, and to ask your specialist to walk through a written illustration of your specific numbers before you sign anything, not a generic example like the one above.
Also Read: Is a Reverse Mortgage a Good Idea for Seniors?
Can You Lower What It Costs You?
A few real ways this plays out:
- Take less than you qualify for. Interest is only charged on what you actually borrow, not your full approved amount, so a smaller initial draw costs less over time than taking the maximum on day one.
- Choose scheduled advances over a lump sum, if your cash flow allows it. You only start accruing interest on each portion as it's released to you.
- Make voluntary prepayments if you're able to. Most lenders allow you to pay down some interest or principal periodically without penalty, which slows how fast the balance grows.
None of this is required. But if reducing long-term cost matters to you, these are the levers that actually move the number.
Also Read: Is a Reverse Mortgage a Good Idea for Seniors?
How a Reverse Mortgage's Cost Compares to Your Other Options
A reverse mortgage isn't the only way to turn home equity into cash, and it's worth knowing how the cost stacks up against the alternatives:
- Selling your home unlocks 100% of your equity with no ongoing interest — but you'll pay realtor commissions, legal fees, and moving costs, and you still need somewhere to live afterward.
- A HELOC often carries a similar setup-fee structure, but requires regular monthly payments and qualifying on income, which not every retiree can do.
- Refinancing your existing mortgage gives you a cash payment too, but adds a new monthly payment on top of reduced equity, plus its own closing costs.
Against those three, a reverse mortgage's upfront cost is often comparable or lower, the real trade-off isn't the fees, it's accepting a higher interest rate in exchange for no required monthly payment.
Also Read: HELOC vs. Reverse Mortgage: Which One Fits You?
Why It Pays to Compare Lenders, Not Just Ask One
Here's what almost nobody tells you upfront: these fees and rates aren't things you can negotiate directly with a lender, they're set by policy. What does change the number is which lender you're comparing against, and what promotions or fee reductions happen to be available at the time you apply. A $1,795 setup fee versus a $995 one is a real difference before you've even gotten to the interest rate.
This is the exact reason we don't work for a single lender. We compare setup fees, rates, and terms across every major reverse mortgage lender serving Ontario homeowners, HomeEquity Bank (CHIP), Equitable Bank, Bloom, and Home Trust, so you're not stuck taking whichever number the first lender you called happened to quote you.
Also Read: Reverse Mortgage Canada Pros and Cons
Frequently Asked Questions
Do I have to pay reverse mortgage fees out of pocket?
No, in most cases, upfront fees can be deducted from your loan proceeds instead, so you don't need cash on hand to cover them.
Is there an ongoing annual fee for a reverse mortgage?
No. There's no annual fee, the only ongoing cost is the interest that compounds on your balance, and most lenders provide a free annual statement.
Are reverse mortgage costs tax-deductible?
Generally, no. Reverse mortgage interest and fees on a home used as your personal residence aren't tax-deductible, the same as with a conventional mortgage. Speak with a tax professional about your specific situation.
Does land transfer tax apply to a reverse mortgage?
No. Land transfer tax applies to property purchases, not to a reverse mortgage on a home you already own.
This article provides general information only and does not constitute financial, legal, or professional advice. Get Reverse Mortgage is a division of BNQ Financial Corp., licensed in Ontario (FSRA #13618). Please contact us to discuss your individual situation.
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