HESA vs reverse mortgage
A reverse mortgage can reduce your remaining equity over time as interest accumulates. A HESA takes a different approach, allowing you to access your equity without taking on a growing loan balance.
The difference is in the details
A HESA and a reverse mortgage can both provide access to your home equity without monthly payments. The important differences are in how the arrangement is structured, how costs accumulate, and what happens to your equity over time.
Compounding loan
HESA: A HESA isn't debt, so there's no interest rate, and nothing accrues over time. When the agreement ends, what you pay us back is simply tied to the agreed change in your home's value.
Accelerating repayment balance
HESA: HEQ isn't a lender, but a partner. We invest alongside you in your home's future, sharing in the upside and, where applicable, the downside. Since our return depends on the same thing yours does, our incentives are aligned from day one.
Erodes existing equity
HESA: What you owe at the end is tied to the amount you received and the agreed change in your home's value, and nothing more. Since no interest ever accrues, the equity you've already built stays locked in from day one.
Steep exit penalties
HESA: There are no prepayment penalties with a HESA. You can choose to exit your agreement at any time without a penalty for paying it out early.
Strict age requirements
HESA: A HESA is available to homeowners in the Greater Toronto Area who meet the program's eligibility requirements, regardless of age.
Works with your mortgage
Keep your existing financing
A HESA can work alongside your existing first mortgage, allowing you to keep your current financing in place while accessing additional equity.
Less cash left over
A reverse mortgage generally requires existing secured debt to be paid out, which can mean using more of the funds you receive to clear your mortgage and leaving less cash available for you.