The question I hear most often from adult children — and from parents who are thinking about their kids — is this: "What happens to the house when Mom or Dad passes away?"

It's a fair and important question. Let me answer it honestly.

A reverse mortgage becomes repayable when one of the following occurs:

1. The last borrower passes away
2. The last borrower permanently moves out (e.g., into long-term care)
3. The home is sold
4. The borrower fails to meet the loan conditions (such as not maintaining the property or not paying property taxes)

As long as at least one borrower is living in the home, the loan does not need to be repaid.

When the loan comes due — most commonly after the homeowner passes away — here's the typical sequence:

The lender is notified of the borrower's passing. The estate (managed by the executor) has a set period — typically 180 days — to repay the loan in full.

An appraisal is ordered to establish the current market value of the property.

The estate repays the outstanding loan balance — the original amount borrowed plus all accumulated interest. This is almost always done by selling the home.

After the loan is repaid, any remaining equity belongs to the estate and is distributed to the heirs according to the will.

Robert borrowed $180,000 against his home 12 years ago. With compounding interest at 7%, his loan balance at the time of his passing is approximately $405,000. His home, which was worth $550,000 when he took out the loan, has appreciated to $780,000.

After repaying the $405,000 loan, his estate retains $375,000 in equity — which passes to his children.

This is the scenario that worries people most. The good news: it's extremely rare, and you're protected if it does happen.

Both major Canadian reverse mortgage lenders — HomeEquity Bank and Equitable Bank — offer a no negative equity guarantee. This means your estate will never owe more than the fair market value of the home at the time of sale, provided the loan conditions were met (property maintained, taxes paid, insurance kept current).

Your children will never receive a bill for the difference. The lender absorbs any shortfall.

Yes. If your heirs want to keep the property rather than sell it, they can repay the reverse mortgage using other funds — savings, a new mortgage in their own name, or proceeds from another asset. The home doesn't have to be sold; it just needs the loan to be repaid within the repayment window.

Some families choose this route when the property has sentimental value or when they believe the home will continue to appreciate.

If both spouses are listed as borrowers on the reverse mortgage, the loan does not come due when the first spouse passes away. The surviving spouse continues living in the home with no change to the loan terms. The loan only becomes repayable when the last surviving borrower leaves the home.

This is one reason I always recommend that both spouses be on the application — it provides important protection for the surviving partner.

One of the most valuable things you can do before taking out a reverse mortgage is have an open conversation with your adult children. Not because you need their permission — you don't — but because it removes uncertainty and prevents misunderstandings later.

I've sat in on many of these conversations, and they almost always go better than clients expect. When children understand that:

• Their parent will remain the homeowner
• The loan is repaid from the home's value, not from other assets
• Any remaining equity still comes to them
• There's a no negative equity guarantee protecting the estate

...most concerns dissolve quickly.

Some clients tell me they want to leave as much as possible to their children. Others say their children are financially comfortable and they'd rather enjoy their retirement. Both are valid.

A reverse mortgage doesn't have to be all-or-nothing. Many clients borrow a modest amount — enough to eliminate a mortgage payment or fund a specific need — while preserving the majority of their equity for their estate.

I can model out different borrowing scenarios and show you the projected estate value under each one, so you can find the balance that feels right for your family.

Have questions about how a reverse mortgage would affect your estate? Book a free consultation — I'm happy to walk through the numbers with you and your family.