reverse mortgage

Reverse Mortgage or Downsizing? An Honest Comparison

Published July 2, 2026 · By YYZ Mortgage

Sooner or later, most Ontario homeowners over 55 have this conversation at the kitchen table: the house is worth a lot — should we sell and downsize, or stay put and tap the equity?

Both paths can work. Both have real costs that the brochures gloss over. This article lays out the honest math for the Greater Toronto Area in mid-2026, when downsizing genuinely wins, and when a reverse mortgage is the better tool.

All dollar figures below are illustrative examples based on a roughly average GTA home price — about $1.07 million as of TRREB’s May 2026 data — not quotes for any specific property.

The true cost of selling and moving in the GTA

Downsizing sounds like pure profit: sell high, buy smaller, pocket the difference. But the transaction costs are substantial, and they come off the top.

Illustrative example: sell at $1,070,000, buy a $700,000 condo in Toronto

Cost item	Illustrative amount
Realtor commission (4–5% + HST on the sale)	$48,400 – $60,500
Land transfer tax on the new home (Toronto, provincial + municipal)	~$20,950
Legal fees (sale + purchase)	~$3,000 – $4,000
Pre-sale repairs, staging, painting	~$5,000 – $10,000
Moving, decluttering, junk removal	~$3,000 – $8,000
Total transaction costs	~$90,000 – $105,000

A few of these deserve a closer look:

Realtor commission is the big one. At 4–5% plus 13% HST, selling a $1.07M home costs roughly $48,000–$60,500 in commission alone. Commissions are negotiable, but even discounted models rarely bring the total below tens of thousands at GTA prices.
Toronto charges land transfer tax twice. Ontario’s land transfer tax on a $700,000 purchase is about $10,475. Buy within the City of Toronto and the municipal land transfer tax roughly doubles that, to about $20,950 combined. Buy in Mississauga, Vaughan or Durham instead and you pay only the provincial portion — geography meaningfully changes the math.
The quiet costs add up. New furniture that fits the smaller space, window coverings, condo moving fees, utility hookups. And if you downsize into a condo, monthly maintenance fees become a permanent line in your budget.

Bottom line: on an average GTA sale, expect roughly 8–10% of your sale price to disappear in transaction costs. In our example, selling at $1,070,000 and buying at $700,000 releases about $275,000 in net equity after roughly $95,000 in costs — real money, but a long way from the $370,000 gross difference.

What a reverse mortgage offers instead

A reverse mortgage lets homeowners 55+ borrow against their home — lenders advertise up to 55% of its value, with some products for borrowers 70+ reaching as high as 59% — with no monthly payments required. The loan, plus compounding interest, is repaid when you sell, permanently move out, or pass away. You stay on title, and the major lenders’ no-negative-equity guarantee means you’ll never owe more than the home’s fair market value, provided property taxes, insurance and maintenance are kept current.

How much you can access depends chiefly on age: as a rough estimate, a 70-year-old might qualify for 30–40% of the home’s value — on a $1.07M home, somewhere around $320,000 to $430,000. (These are estimates only; lenders price each file individually.) You can get a personalized figure in minutes with our reverse mortgage calculator, and our qualification page explains what lenders assess.

The trade-off is interest. Reverse mortgage rates in mid-2026 run in the low-6% to mid-8% range depending on lender and product — roughly 1.5–2.5 percentage points above conventional mortgages — and because there are no payments, the balance compounds. Over a decade, that meaningfully erodes the equity your estate receives, a dynamic we walk through with full math in Reverse Mortgages and Your Estate.

The factors a spreadsheet can’t capture

Money is only half of this decision.

Community and routine. Your street, your neighbours, your doctor, your place of worship, the grandkids twenty minutes away. Downsizing often means leaving your neighbourhood entirely — at GTA prices, the affordable smaller home is frequently in a different city. Surveys consistently find most older Canadians want to age in place; if that’s you, it deserves real weight, not guilt.

The house itself. A garden you love is one thing; stairs you can no longer manage, a roof due for replacement, and 2,400 square feet to heat and clean are another. Sometimes the honest answer is that the home no longer fits the life.

The emotional cost of the move itself. Clearing out 40 years of possessions is one of the most stressful projects many retirees ever undertake. It is not a reason to avoid a good financial decision — but pretending it’s trivial helps no one.

When downsizing genuinely wins

We arrange reverse mortgages, and we’ll still tell you plainly: sometimes selling is the better move. Downsizing tends to win when:

You need a large equity release. If you require more than a reverse mortgage’s maximum (55–59% of value at most, often less at younger ages), selling is the only way to unlock the rest.
You want zero interest cost. The equity you free by selling never compounds against you. For homeowners focused on maximizing their estate, that’s decisive.
The home is a burden. High upkeep, property taxes and utilities on a large house are recurring costs a smaller home permanently reduces.
You’d be happy — or happier — somewhere else. Closer to family, a walkable condo, a smaller town. If the move improves your life anyway, the transaction costs buy something real.

When a reverse mortgage wins

A reverse mortgage tends to be the better fit when:

Staying in your home and community is the priority. It converts equity to cash with no moving van, no goodbye to the neighbourhood, and no monthly payment.
The amount you need is modest. If you need $150,000–$300,000 rather than every dollar of equity, borrowing it can cost less upheaval — and remember, downsizing has its own six-figure “fee” in transaction costs.
Market timing works against selling. As of May 2026, GTA average prices were down 4.6% year over year, while sales rose and new listings fell sharply — a market in flux. A reverse mortgage lets you access equity now without crystallizing a sale price you’re unhappy with. (Timing cuts both ways, of course: if you’d also be buying in the same market, weakness partly nets out.)
You want to fund aging in place. Renovations like a main-floor bedroom, walk-in shower or stair lift can make the current home work for many more years.

Don’t forget the middle options

Reverse mortgages aren’t for everyone, and neither is selling. If you have solid retirement income, a HELOC or a conventional refinance can unlock equity at lower rates than a reverse mortgage — the catch is that both require monthly payments and income qualification. For homeowners still carrying a mortgage into retirement, we look at one specific strategy in Using a Reverse Mortgage to Pay Off Your Existing Mortgage. And if you’re hesitant because of something you’ve heard, check it against 7 Reverse Mortgage Myths, Debunked.

A licensed mortgage professional is actually expected to walk you through these alternatives — in Ontario, suitability for older borrowers is a named regulatory priority, and lenders require independent legal advice before any reverse mortgage funds.

A simple way to decide

Try this three-question test:

If money were equal, would you rather stay or move? Answer honestly — it does most of the work.
How much cash do you actually need? More than ~50% of your home’s value points to selling; a modest amount keeps both options open.
Compare the two costs: roughly $90,000+ in one-time transaction costs to downsize an average GTA home, versus projected compound interest on the amount you’d borrow. Run your own numbers in the reverse mortgage calculator, then read the full Ontario guide or browse the FAQ.

Whichever way you lean, get the numbers on paper before you decide — and take your time. Both of these doors stay open longer than you think.

This article is general information, not financial, legal or tax advice. Mortgage products are subject to lender approval (OAC). Rates and product details change — confirm current terms before deciding. Speak with a licensed mortgage professional about your situation.

Frequently asked questions

How much does it cost to downsize in the GTA?

Budget roughly 8 to 10 percent of your sale price once everything is counted. On an average GTA home around $1.07 million, realtor commission of 4 to 5 percent plus HST, land transfer tax on the new home (doubled in Toronto), legal fees, moving, and pre-sale prep can total about $90,000 to $105,000. The exact figure depends on your commission rate, where you buy, and how much preparation the home needs.

Is a reverse mortgage better than selling your house?

Neither is universally better. Downsizing usually releases more equity and stops interest from compounding, while a reverse mortgage lets you stay in your home and community with no monthly payments. The right answer depends on how attached you are to your home, how much cash you need, and how the transaction costs compare with projected interest.

Do you pay land transfer tax twice in Toronto?

Effectively yes. Buyers within the City of Toronto pay both the Ontario land transfer tax and a municipal land transfer tax calculated on similar brackets, roughly doubling the bill. On a $700,000 purchase that is about $20,950 combined, versus about $10,475 for the same purchase outside Toronto.

How much can I get from a reverse mortgage instead of selling?

Canadian lenders advertise up to 55 percent of your home's value, with some products for older borrowers reaching as high as 59 percent. The amount depends mainly on your age, your home's value and location, and the product. A 70-year-old might access roughly 30 to 40 percent as an estimate; use a calculator or a broker quote for a real number.

What are the alternatives to both downsizing and a reverse mortgage?

A home equity line of credit (HELOC) or a conventional refinance can unlock equity at lower interest rates if your income supports the monthly payments. Renting out part of your home is another option some retirees use. A licensed mortgage professional should walk you through all of these before you commit to anything.

Figures shown are estimates only — not an offer of credit or a commitment to lend. The amount you may qualify for depends on the lender's assessment of your age(s), property type, location, appraised value and any existing liens. Reverse mortgage lenders require independent legal advice before funding. A reverse mortgage is not suitable for everyone; alternatives include refinancing, a home equity line of credit, or downsizing.