House-rich, cash-tight: how one family stopped splitting the bill every month
A few months ago I worked with a client whose family was living out a version of a story I hear a lot.
She and her siblings had quietly fallen into a routine: every month, they'd each chip in to help their mom cover her bills. It wasn't one big expense - it was the slow accumulation of everything that comes with aging. Some accessibility updates to the house. A health cost here, a health cost there. None of it dramatic on its own, but together it was enough to stretch three separate households thin, month after month.
Their mom didn't want to sell. She'd lived in that home for decades, and she wanted to stay there - which is a completely reasonable thing to want. Selling would have solved the cash problem and created a much bigger one: a move she didn't want, away from a home and a neighbourhood she loved.
So we looked at a reverse mortgage.
What a reverse mortgage actually is
If you're a homeowner aged 55 or older, a reverse mortgage lets you turn some of the equity you've already built into tax-free cash - without selling, without moving, and without making monthly mortgage payments. You keep the title. You keep your home. The loan, plus interest, gets repaid later, usually when the home is eventually sold.
For this family, it meant their mom could cover her own expenses again, on her own terms, in the home she'd already paid for. And her kids could stop treating their own monthly budgets like a backup emergency fund for hers.
The honest trade-offs
I don't lead with the upside and leave it there, because that's not the full picture.
The interest rate on a reverse mortgage is higher than a regular mortgage. Since there are no monthly payments, the interest compounds - the balance grows over time, which means less equity left for the estate down the road. There are also set-up costs: an appraisal, legal fees, administration.
None of that makes it a bad product. It makes it a product that's right for some people and wrong for others. The only way to know which is to look at the actual numbers.
Who this tends to fit
I see this work well for retirees who are house-rich and cash-tight - people with a paid-off or nearly-paid-off home, and not quite enough monthly income or savings for the life (or the unexpected costs) in front of them. It can ease a tight budget, fund a health expense, or take the pressure off family members who've been quietly stepping in to help.
If that sounds like your situation, or a parent's, or someone you're helping to support - I'm glad to walk through it with no agenda. We'd start with what you're actually trying to solve, and look at whether this is the right tool for it, or whether something else fits better.