Managing Home Equity in Retirement

If you are 65 or older and own your home, you may have substantial wealth tied up in it. That wealth can support your retirement plan. It can help fund care, home improvements, family support, or future housing changes.

It should not automatically be treated as your pension.

Your home provides shelter first. Converting its equity into retirement income involves costs, borrowing, interest, tax considerations, and estate-planning decisions.

The 2026 retirement conversation

The HOOPP–Abacus 2026 Canadian Retirement Survey reports that 49% of Canadians believe home equity is no longer the best way to fund retirement.

That is a broad Canadian result, not a seniors-only statistic. It still matters to Canadians aged 65 and older because many retirement plans continue to rely on the future sale or borrowing value of a home.

The same survey found that 57% of Canadians would prefer a guaranteed lifetime pension over homeownership without a workplace pension.

The practical point is simple:

Home equity may support retirement income. It does not provide the same function as a guaranteed pension.

A pension can provide scheduled income for life. Home equity is an asset that must be sold, borrowed against, or otherwise converted before it can fund expenses.

Why downsizing is not automatic

Many retirement plans assume that a homeowner will sell a larger property, purchase a smaller one, and invest the difference.

That plan may work. It may also be difficult to execute.

Recent Canadian housing research indicates that only about 10% of homeowners plan to move to a smaller home within the next decade. Among Canadians aged 65 and older, the figure is approximately 16%.

Common barriers include:

• Limited availability of suitable smaller homes.
• High purchase prices for condos, townhomes, and accessible homes.
• Real estate commissions.
• Legal fees.
• Moving and storage costs.
• Repairs or renovations before listing.
• Land transfer tax on the replacement property.
• Concern about leaving a familiar community.
• Difficulty finding a property that supports future mobility or care needs.

For many households, the move must create a meaningful financial difference before it makes sense. Selling a home and purchasing another property at only a slightly lower price may release less cash than expected after transaction costs.

The decision should therefore begin with a net calculation:

1. Estimate the current home’s market value.
2. Estimate selling costs.
3. Estimate the price of the replacement home.
4. Add legal, moving, renovation, and tax-related costs.
5. Calculate the net amount available after the transaction.
6. Test whether that amount meaningfully improves monthly retirement income.

Do not use the gross value of the home as the expected retirement benefit.

Start with income that does not depend on your home

Before considering home equity, list your existing retirement income.

Include:

• Canada Pension Plan income.
• Old Age Security.
• Guaranteed Income Supplement, if applicable.
• Employer pension income.
• RRIF withdrawals.
• RRSP withdrawals.
• TFSA withdrawals.
• Non-registered investment income.
• Annuity income.
• Part-time or consulting income.
• Rental income, if applicable.

Use your My Service Canada Account to review your CPP information and benefit estimates. The Canadian Retirement Income Calculator can help you compare retirement income sources and test different retirement ages and savings assumptions.

Then identify the monthly gap:

Expected after-tax income – expected monthly expenses = surplus or shortfall

Separate expenses into three groups:

Essential expenses

• Housing costs.
• Property taxes.
• Utilities.
• Insurance.
• Food.
• Transportation.
• Medication and health-related costs.
• Minimum care requirements.

Flexible expenses

• Travel.
• Hobbies.
• Gifts.
• Dining out.
• Home improvements.
• Vehicle replacement.

Future expenses

• Home repairs.
• Accessibility changes.
• Dental and vision care.
• In-home support.
• Long-term care.
• Assistance for a spouse or family member.

If a shortfall exists, home equity is one potential tool. It is not automatically the first tool.

Ways to access home equity

1. Sell and downsize

You sell your existing property and purchase a less expensive home.

This may provide a lump sum that can be invested or used to supplement income. It may also reduce maintenance and property-tax expenses.

Consider:

• The net proceeds after all transaction costs.
• Whether the new home is suitable for long-term living.
• Whether the new community provides transportation, health services, and family access.
• Whether renting could be more practical than buying.
• How the proceeds will affect taxable income or income-tested benefits.

A smaller home is not necessarily less expensive if it requires a high purchase price, condominium fees, renovations, or frequent travel to essential services.

2. Use a home equity line of credit

A HELOC allows you to borrow against available equity and draw funds as needed.

The Financial Consumer Agency of Canada explains HELOC requirements and risks. A HELOC generally requires:

• Sufficient income.
• Acceptable credit.
• Regular payments.
• The ability to manage variable interest rates.
• Ongoing property taxes, insurance, and maintenance.

A HELOC may provide flexibility, but it is still borrowing. Interest payments continue while the balance remains outstanding. Payments may increase if rates rise.

Review secured lending options available through Glenn Bauman Mortgages before assuming a HELOC will fit your retirement cash flow.

3. Consider a reverse mortgage

A reverse mortgage is generally available to homeowners aged 55 or older. It allows you to borrow against your home while remaining in the property.

Funds may be received as:

• A lump sum.
• Scheduled advances.
• A combination of both.

Regular mortgage payments may not be required, depending on the product. Interest is added to the balance over time. The loan is generally repaid when you sell, move permanently, or die.

The FCAC reverse mortgage guide identifies several important considerations:

• Interest rates may be higher than standard mortgage rates.
• Interest compounds if it is not paid regularly.
• Fees may apply.
• Homeowners must continue paying property taxes and insurance.
• The property must be maintained.
• The outstanding balance reduces the equity available to the estate.
• Independent legal advice is recommended.

A reverse mortgage may help address a defined income gap. It should not be viewed as free income or as a replacement for pension planning.

Protect your estate and your legacy

If you expect to leave your home or its remaining equity to family members, include that goal in the decision.

Review the following items:

• Your will.
• Powers of attorney for property and personal care.
• Named beneficiaries on registered accounts and insurance policies.
• Joint ownership arrangements.
• Outstanding mortgage or secured credit balances.
• The expected repayment process after death.
• Whether a surviving spouse can remain in the home.
• The timing required to sell the property.
• Potential family disagreements about the property.
• Your plans for charitable gifts or inheritances.

Home equity borrowing can reduce the amount available to heirs. That may be acceptable if the funds improve your quality of life, fund care, or support a spouse. It must be understood before the loan is arranged.

Discuss the decision with your lawyer, tax professional, and investment adviser where appropriate. A mortgage professional can explain lending structures, but no single adviser should replace the others.

Use home equity as one part of the plan

A balanced retirement plan may use several sources:

1. Government benefits for baseline income.
2. Workplace pensions for predictable payments.
3. Registered and non-registered savings for flexibility.
4. TFSA withdrawals for tax-efficient access to funds.
5. Home equity for a specific, documented purpose.
6. Insurance and estate documents to manage future risks.

Treat home equity as a reserve or planning tool rather than your primary monthly pension.

Before borrowing, define:

• The amount required.
• The reason for the funds.
• The expected monthly or annual withdrawal.
• The estimated interest cost.
• The effect on your home equity.
• The effect on your estate.
• The plan if you need to move.
• The plan if your spouse dies first.
• The plan if care costs increase.

Do not borrow the maximum simply because the available equity appears large.

Book a retirement-home-equity conversation

If you are 65 or older, you do not need to decide between staying in your home and protecting your retirement income without reviewing the numbers.

Glenn Bauman Mortgages can help you examine the mortgage and home-equity options available for your situation. Prepare your current mortgage statement, estimated home value, pension information, monthly budget, and estate-planning objectives.

Book a conversation or start your review with Glenn Bauman Mortgages.

Use your home as one tool in a broader retirement plan. Do not treat it as your pension.