Most people spend a lot of time thinking about how to get into a reverse mortgage. Fewer think carefully about what happens at the end — and that's a gap worth closing.

Understanding your renewal and exit options isn't just useful planning. It gives you confidence that you're in control of this decision at every stage, not just at the beginning.

Canadian reverse mortgages are structured as closed-term loans, similar to a regular mortgage. Terms typically range from 6 months to 5 years, with fixed or variable interest rate options.

At the end of each term, you have a choice:

1. Renew the reverse mortgage for another term (most common)
2. Repay the loan in full and exit the arrangement
3. Access additional funds if your home has appreciated and you qualify for more

Most borrowers simply renew at the end of each term, often for many years. The process is straightforward and doesn't require a new appraisal in most cases.

When your term comes up for renewal, your lender will contact you with renewal options. You'll typically be offered:

• A new fixed rate for a new term (1, 2, 3, or 5 years)
• A variable rate option
• The opportunity to adjust your loan amount if you want to access more equity

You are not required to repay the loan at renewal. Renewal is simply the point at which your interest rate is reset for the next term. If you're happy with your arrangement, you sign the renewal and continue as before.

One important note: If you don't actively renew, the loan may roll into a short-term or open rate, which can be higher. It's worth staying on top of renewal dates.

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

• You sell your home — the loan is repaid from the sale proceeds
• You permanently move out — for example, into a long-term care facility
• The last borrower passes away — the estate has a period (typically up to 12 months) to repay the loan
• You breach the loan conditions — for example, by failing to maintain the property or keep up with property taxes and insurance

Outside of these events, you are never required to repay the loan while you're living in your home.

Yes — but there may be a cost.

Because reverse mortgages are closed-term loans, paying them off before the end of a term typically triggers a prepayment penalty. The penalty is calculated based on the interest rate differential or a set number of months' interest, depending on the lender and the terms of your agreement.

Prepayment penalties are most significant in the early years of a term. As you approach the end of a term, the penalty decreases and eventually disappears.

When does early repayment make sense?

• You've decided to sell your home and move
• You've received an inheritance or other windfall and want to clear the debt
• You want to refinance into a conventional mortgage (if you now have qualifying income)
• Interest rates have dropped significantly and you want to lock in a better rate at renewal

If you're considering early repayment, ask your lender for a payout statement that includes the penalty amount. In many cases, it's worth waiting until the end of your current term to avoid the cost.

When the reverse mortgage is repaid — whether through a sale, an estate settlement, or early repayment — any equity remaining after the loan balance is paid goes to you or your estate.

For example: if your home sells for $800,000 and your outstanding reverse mortgage balance (principal plus accumulated interest) is $320,000, your estate receives $480,000 — minus any selling costs.

The no negative equity guarantee means you will never owe more than the home's fair market value at the time of repayment, regardless of how much interest has accumulated.

If your home has appreciated in value since you took out the reverse mortgage, you may be eligible to access additional funds at renewal or at any point during your term (subject to lender approval and a new appraisal).

This is one of the underappreciated advantages of a reverse mortgage: as your home grows in value, so does your potential borrowing capacity. Many clients access additional funds years after their initial setup to cover new expenses — home renovations, healthcare, travel, or helping family.

The best time to think about your exit strategy is before you sign — not after. Here's what I walk every client through:

1. Understand your term options and choose the one that fits your plans
2. Know your prepayment penalty structure so there are no surprises
3. Keep your property taxes, insurance, and maintenance current — these are conditions of the loan
4. Talk to your family about what happens when the loan eventually becomes due
5. Review your arrangement at each renewal to make sure it still fits your situation

A reverse mortgage should feel like a tool you control — not something that controls you.

Whether you're just starting to explore a reverse mortgage or you already have one and want to understand your options, I'm happy to help.

Book a free call with Rachel — no pressure, no obligation, just clear answers.