A generation ago, it would have been unthinkable for many Canadians to carry the mortgage on their home into retirement. But for many on the cusp of retirement now, that’s no longer the case.
A survey of 1,626 Canadians conducted by real estate firm Royal LePage in May found that two per cent of Canadians expect to retire in 2025 and three per cent in 2026. Of these, around one-third (29 per cent) say they will continue to pay down their mortgage into their retirement years.
“Canadians today are much more inclined to carry debt because either working later into their lives or they’ve got some more disposable income that they can utilize to pay these things off down the road. But they’re not just saying, ‘I want to have my home paid off,’” said Shawn Zigelstein of Royal LePage.
Canadians are also buying their homes a lot later in life, one financial planner said.
“People are buying homes later and now they also have the option for a 30-year amortization. That pushes mortgage payments further into what used to be the traditional retirement years,” said Jason Evans, whose firm offers financial planning advice for retirement.
Bloom Financial works exclusively with Canadians aged 55 or over and CEO Ben McCabe said a large part of his clientele is now retirees looking for options on how to pay down their mortgage.
“For 80 per cent of the clients that we speak to at Bloom, that is a situation that they’re in,” he said.
“Retiring with a mortgage is possible, but there are some pitfalls to watch out for,” Evans said.
Evans recommends waiting until you’re 70 to start drawing Canada Pension Plan benefits.
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“The first is the temptation to start CPP benefits early. While this can help with cash flow, it means smaller CPP payments for life. For many people, waiting until age 70 leads to higher monthly income and would provide them with the most value from the program,” he said.
He said some older Canadians might want to dip into investments to pay off mortgages, but they need to watch the markets carefully.
“A mortgage also means higher monthly expenses in retirement. To cover those costs, retirees may need to take out more from their investments. That can work when markets are strong, but during a downturn, it might force them to sell at a loss just to pay the bills,” he said.
McCabe said the problem some Baby Boomers face is that there is a huge gap between how much their home is worth and the amount of liquid cash they hold.
“They’ve never earned more than $30,000 or $40,000 a year in their career, but they’re sitting on a $2-million home because they happened to buy a house in Little Portugal (in Toronto) in the ’70s,” he said.
“There’s this disproportionate amount of real estate wealth versus liquid wealth or income,” he said.
An option that some homeowners can exercise to get some cash in hand is a HELOC – a home equity line of credit. As the name suggests, a HELOC is a form of credit that you can take out on your home.
However, McCabe said it might not be for you if you’re already well into your retirement.
“It’s a better solution for younger people who have employment income and can service the interest payment that’s required on that HELOC,” he said.
A financing option available almost exclusively for Canadians over 55 is a reverse mortgage.
“A reverse mortgage is a loan against one’s home. It’s only available if you’re a senior,” McCabe said.
The key difference between a reverse mortgage and any other kind of financing option is that there are no monthly payments.
“The loan isn’t due until you pass away or until you sell your home. So effectively, until you no longer occupy that home as your principal residence,” he said.
He said many older Canadians use their reverse mortgage to replace the primary mortgage on their homes.
“Effectively, you’d be replacing a mortgage that has monthly payment obligation with a mortgage that doesn’t have one,” he said.
He gave the example of a retiree with a household income of $4,000 a month, with $1,500 going to the bank every month for a mortgage payment.
“Now all of a sudden, you have that full $4,000 of income in your net income that you can apply towards your living expenses and living well retirement,” he said.
According to the Royal LePage report, 47 per cent said they don’t plan to downsize within two years of retiring, while 44 per cent said they do. The rest were not sure.
The most popular downsized dwelling was a standard condominium, with 43 per cent saying they would prefer to downsize to a condo and a quarter (25 per cent) preferring to downsize to a senior living community.
Only 16 per cent said they would live in a detached home and 11 per cent said they would prefer live in an attached home. The rest were undecided.
Condominium prices have been dropping rapidly in some of Canada’s hottest housing markets.
According to one report, condo prices will have dropped by 15 to 20 per cent in the Greater Toronto Area by the end of the year, compared to a 2023 high.
“Downsizing can be a good option for some. However, it can sometimes be challenging to find a suitable next home at a lower price point,” Evans said.
“Moving to a new area is often required to free up a meaningful amount of equity. If downsizing is part of a person’s retirement plan, it’s important to keep an eye on the real estate market and consider a few different housing options,” he said.
© 2025 Global News, a division of Corus Entertainment Inc.
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