What is a Home Equity Sharing Agreement (HESA)? A guide for Canadian homeowners.
A Home Equity Sharing Agreement provides an alternative way to access your home's wealth without taking on a loan, adding monthly bills, or accumulating interest.
For many Canadian homeowners, a significant portion of their net worth is tied up in real estate. While home values across the country have grown substantially over the decades, accessing that wealth traditionally meant taking on new monthly mortgage payments or accumulating compounding debt.
A Home Equity Sharing Agreement (HESA) provides an alternative way to access your home's wealth without taking on a loan, adding monthly bills, or accumulating interest.
What is a Home Equity Sharing Agreement?
A Home Equity Sharing Agreement (HESA) is a financial agreement that allows you to access a portion of your home's equity today in exchange for a share of your home's future change in value.
Unlike traditional financial products, HESAs are an equity co-investment, not a loan. There are no monthly payments, no interest charges, and no added debt burdens placed on your budget. You retain full ownership and control of your home while receiving a lump-sum cash payment to use however you choose.
| Feature | Traditional loan / HELOC | Reverse mortgage | Home Equity Sharing Agreement (HESA) |
|---|---|---|---|
| Monthly payments | Required monthly principal or interest payments. | No monthly payments required. | No monthly payments required. |
| Interest charges | Fixed or variable interest rates apply. | Compounding interest accumulates over time. | No interest charged. |
| Added debt | Traditional debt balance. | Debt increases constantly as interest compounds. | Zero added debt. |
| Minimum age | Standard legal age (18+). | 55+ minimum age required. | Standard legal age (18+). |
| Qualification criteria | Strict income verification and high credit score required. | Income and credit checks required. | No income requirements; accessible credit scores (500+). |
Learn more about how a HESA compares to traditional lending models.
Key benefits of a HESA for Canadian homeowners
1. Protect your monthly cash flow
Traditional bank loans and Home Equity Lines of Credit (HELOCs) demand ongoing monthly payments. A HESA requires zero monthly payments throughout the entire term. This keeps your monthly income free to cover living expenses, retirement travel, or unexpected health costs. A HESA does carry one transparent upfront cost: a 3.9% origination fee on the amount advanced, charged at closing, with no other ongoing fees.
2. Eliminate compounding interest
Reverse mortgages and conventional secondary financing rely on interest rates that accumulate over time. Over 5 to 10 years, compounding interest can significantly reduce your remaining equity. With a HESA, no interest is charged. Settlement is strictly tied to the future performance of your home's value, creating a true partnership structure.
3. Accessible qualification criteria
Traditional Canadian banks often enforce rigid debt-to-income ratios and strict credit score minimums that make qualifying in retirement difficult. Home Equity Partners (HEQ) evaluates applications based primarily on your home's equity rather than strict income tests, accommodating credit scores starting from 500+.
When does a HESA make sense?
Understanding whether a HESA fits your financial plan depends on your goals and timeline.
A HESA is an ideal choice if you want to:
- Pay off high-interest debt: Clear credit cards, personal loans, or secondary mortgages to simplify your finances.
- Supplement retirement income: Enjoy lifestyle flexibility without draining fixed-income savings or pensions.
- Fund home renovations: Invest back into your property to improve comfort or accessibility.
- Provide an early inheritance: Help children or grandchildren enter the Canadian housing market today when they need it most.
A HESA is not a good fit if:
- You plan to sell within 1 to 3 years: HESAs are designed as long-term financial solutions with agreements lasting up to 10 years. If you plan to move or sell in the immediate future, standard short-term loans are generally a better option.
See a full breakdown of who benefits most from a HESA.
How the HESA process works
- Get an estimate: Complete a simple online form to review your property details and equity potential. Then meet with an HEQ specialist to answer all your questions.
- Third-party underwriting and appraisal: You will work with Perch, our licensed broker partner, to review your financial status and confirm your home's current market value.
- Receive your cash: Unlock a portion of your equity as a lump-sum payment, with zero monthly obligations.
- Settle on your terms: Settle the agreement any time during the 10-year term through a home sale, refinancing, or buying out the agreement with cash savings.
Learn how your cash payment and settlement are calculated.
Take control of your financial future
Your home has built up significant value over the years. Using that wealth should not force you into monthly debt or compounding interest charges.
Curious how much equity you could access? Complete your 2-minute online estimate and schedule a call with an HEQ specialist today.