Reverse mortgages have helped hundreds of thousands of Canadian seniors stay in their homes. But the day the last borrower dies, the product changes character completely: a loan that required no payments for decades suddenly becomes fully due, on a firm deadline, with interest compounding daily against the estate. As a mortgage broker who works with estates, I consider this one of the most under-appreciated deadlines in Canadian estate administration.
The 180-day clock
HomeEquity Bank — the CHIP reverse mortgage lender — requires the balance to be repaid within 180 days after the death of the last person on the mortgage, and its own client guidance confirms that a file not repaid within that window falls into default. Equitable Bank’s reverse mortgage is widely reported to operate on the same 180-day timeline. The estate receives a “due and payable” notice, and the clock runs from the date of death — not from the date probate is granted. Lenders may extend at their discretion, and in my experience early, transparent communication from the estate is what earns that discretion; silence is what exhausts it.
Meanwhile, interest accrues daily at the contract rate. On a $300,000 balance at 6.49%, that is roughly $53 a day — about $1,600 a month — added to the payout. On larger balances the daily bleed is proportionally larger, and it continues through every week of family indecision, probate delay or litigation.
What the estate can and cannot do
Heirs cannot assume a reverse mortgage — pricing was based on the original borrowers’ ages, so the loan must be repaid in full. That leaves three paths, alone or in combination: sell the home (the most common route — the lender is paid from proceeds at closing); refinance, either a conventional mortgage in a qualifying heir’s name or a short-term private/bridge mortgage where probate or a dispute blocks an immediate sale; or repay from other estate assets. Two pieces of good news are built into the product: both major lenders offer a no-negative-equity guarantee, meaning the estate never owes more than the home’s fair market value provided the mortgage obligations were met, and CHIP’s prepayment charge is waived when the mortgage becomes due because of death.
The executor’s playbook: first 30 days
Notify the lender promptly with the death certificate and a copy of the will. Request a written payout statement — HomeEquity Bank routes executors through FNF Canada’s PayoutConnect portal (lawyers use LawyerConnect). Payout statements are time-limited and include a per-diem interest figure, so order a fresh one near closing. Have the estate’s lawyer verify the balance against the original commitment, advance history and statements — balance disputes do arise, and a materially higher-than-expected payout figure is a forensic accounting question the estate is entitled to have answered before discharge. Then decide the exit strategy early: if the home will be sold, list it well inside the window; if an heir wants to keep it, start their financing approval immediately.
Miss the deadline and Ontario’s power of sale takes over
A reverse mortgage is a conventional first charge, and on default the lender’s usual Ontario remedy is power of sale under the Mortgages Act: a Notice of Sale can issue after 15 days of default, followed by a redemption period of at least 35 days (40 for a matrimonial home), then claim, judgment, possession and sale. The estate does not forfeit its equity — surplus proceeds above the debt and costs are returned — but enforcement legal fees, realtor costs and relentless daily interest all come out of that equity first. End to end, a power of sale typically consumes six months or more, and tens of thousands of dollars of value that should have gone to beneficiaries.
The silent second problem: the vacant house
While the payout question is being sorted, the home usually sits empty — and most Canadian home insurance policies restrict or void coverage once a property is vacant for about 30 consecutive days. Theft, vandalism and water damage are typically excluded first. The executor should notify the insurer of the death and vacancy immediately, arrange a vacancy permit or standalone vacant-home policy, keep heat and utilities on, and run documented regular inspections. Unpaid property taxes and lapsed insurance are themselves defaults under the mortgage covenants — a trap that can spring even inside the 180-day window.
Frequently asked questions
Does probate pause the reverse mortgage deadline?
No. The 180 days and the daily interest run regardless of how long the Certificate of Appointment takes. If probate or a will dispute threatens the timeline, contact the lender early and consider bridge financing.
Do the heirs owe money if the house sells for less than the balance?
No. The no-negative-equity guarantee caps recovery at the home’s fair market value, provided taxes, insurance and upkeep obligations were met. Heirs are not personally liable for a shortfall.
Can a family member keep the house?
Yes — by paying out the reverse mortgage in full, usually with a conventional mortgage in their own name (they must qualify on income and credit) or short-term private financing while the estate settles.
What if the payout balance looks wrong?
Request the full advance and interest history and have the estate’s lawyer or accountant reconcile it before closing. Estates are entitled to a verified figure; discrepancies should be resolved in writing, not absorbed.
What are reverse mortgage rates in 2026?
Broadly in the 6–8% range depending on product and term — typically one to two percentage points above conventional mortgage rates, which is exactly why every extra month of accrual matters to an estate.
The bottom line
A reverse mortgage on death is a solvable problem with an unforgiving schedule. The estates that come through cleanly do four things in the first month: notify the lender, verify the balance, insure the vacant home properly, and commit to an exit strategy — sale, refinance or payout. The estates that suffer are the ones that let the deadline arrive while the family is still deciding who is in charge.
Gurpinder Gaheer, BA (Hons), MBA, is a dual-licensed real estate broker and mortgage broker serving families, estate trustees and their advisors across Ontario. His practice includes estate property sales, reverse mortgage payouts, bridge and private financing for estates, and acting as a neutral professional in contested estate matters. You can reach him through gaheer.com/.
This article is general information, not legal, tax or financial advice, and lender policies change — verify current terms directly with the lender. Always consult a qualified Ontario estates lawyer and licensed mortgage professional about your own situation.