Reverse Mortgage Before Long-Term Care: Should You Access Equity Before Moving?

You're facing a reality: you or your spouse will likely need long-term care at some point. The question isn't if, but when—and whether you should access your home equity before that move happens. The answer might surprise you.

The Long-Term Care Reality in Ontario

Let's start with facts, not fears:

• Average long-term care cost in Ontario: $60,000-$85,000 per year for a private room; $45,000-$65,000 for a semi-private room
• Wait times for publicly funded beds: 6-18 months depending on region (some areas much longer)
• Many seniors must pay privately first, then transfer to public bed: This can cost $100,000+ before transitioning to publicly funded care
• Care costs are accelerating: Inflation in healthcare and staffing means costs rise 5-8% annually
• Government covers only partial costs for public long-term care: You or your family typically supplements the difference

For a couple: If one spouse needs long-term care, the other spouse stays home. The cost of care PLUS the cost of maintaining your home (mortgage, property tax, maintenance) can deplete savings quickly.

This is where many couples wish they'd accessed a reverse mortgage earlier.

The Timing Question: Should You Get It Now?

This is the crucial decision. Most financial advisors say: If you think you might need long-term care within 5-7 years, consider accessing equity NOW.

Here's why:

Timing	Pros	Cons
Get RM Now (age 70-75)	Access funds before declining health makes qualification harder; you choose the timing	Pay interest for years even if you don't immediately need the funds; reduces inheritance
Wait Until Care Is Needed	Only access equity if actually necessary; less interest paid if you die soon	May not qualify due to health issues; long-term care facility might decline to allow you to keep home; chaos during health crisis
Get RM When Spouse Enters Care	Immediate access to funds for spouse's care costs; remaining spouse can stay home	One partner's health already compromised; no time to shop around; stress during crisis
Never Get RM; Plan Differently	Maintain full inheritance; no interest costs	Risk forced sale of home; risk spouse can't stay home if one partner is in care; depleted savings

According to the Ontario Long-Term Care Association, many families report they wish they'd planned their finances earlier. The crisis of a spouse suddenly needing care forces decisions in weeks that should be made in years.

Scenario: The Couple With No Plan vs. The Couple With a RM Plan

Case 1: No Reverse Mortgage Plan

Margaret (78) has been managing okay with her pension and CPP. Her husband David (80) starts showing signs of dementia. Within 6 months, he's been diagnosed and assessed for long-term care. A private room is $75,000/year. Margaret's income is $3,200/month ($38,400/year). Even with David's CPP, the care cost exceeds their income.

• Margaret's home ($850,000 value) is her only asset
• Their savings ($85,000) will cover 13 months of David's care, then Margaret must sell the house
• Timeline: David enters care; 13 months later, house is sold
• Margaret's outcome: Displaced from her home, forced to downsize at age 78, watching her home sell in a rushed transaction
• Net proceeds to Margaret: ~$500,000 (after realtor commission, legal fees, moving costs)
• Where Margaret lives: In a condo she resents, in a community she doesn't know, alone

Case 2: Reverse Mortgage Plan

Same situation, but Margaret got a reverse mortgage 3 years earlier when David was first showing memory issues.

• Margaret accessed $200,000 via reverse mortgage line of credit, keeping $180,000 in reserve
• Cost to get RM: $6,000 in closing costs
• Interest paid over 3 years: ~$50,000
• When David needs care: Margaret taps the remaining $180,000 from the LOC to cover his care costs for 2-3 years
• Margaret's outcome: Stays in her home while David is in care; no forced sale; no rushing; manages situation from her sanctuary
• Estate impact: Home is inherited by their children, but with $150,000 owing on the RM (depending on how much was drawn)
• Margaret's inheritance: Same home value, minus the reverse mortgage balance—but Margaret got to stay home and age gracefully

Which Margaret had a better outcome? The one with the reverse mortgage plan.

When to Get a Reverse Mortgage Before Long-Term Care

Strong reasons to access equity NOW:

✓ You or your spouse is showing signs of cognitive decline (memory loss, confusion) ✓ One spouse has a diagnosed condition that will require long-term care (advanced arthritis, Parkinson's, heart disease, dementia) ✓ Your home care costs are rising—you're paying out-of-pocket for in-home care now ✓ Your savings are declining and you're in your late 70s or 80s ✓ You have a surviving spouse who you want to stay in the home ✓ Your income is barely covering your current expenses ✓ You've seen other family members need care and want to be prepared ✓ Your health is still good enough that you qualify for better rates

Weak reasons (reasons to wait or skip it):

✗ You're 65 and perfectly healthy with good savings ✗ Your parents lived to 100 with no care needs (your path might be different) ✗ You just "have a feeling" you might need care (vague concerns aren't good enough) ✗ You want to avoid any debt (if you're healthy and financially stable, this might be fine) ✗ You're philosophically opposed to borrowing (respect that, but understand the tradeoff)

How Reverse Mortgage Helps When One Spouse Enters Long-Term Care

Here's the specific mechanics of how this works in Ontario:

Scenario setup:

• Both spouses on the home title
• Both are borrowers on the reverse mortgage
• One spouse needs to move to long-term care

What happens:

1. The spouse moving to care is still technically an owner of the home
2. The remaining spouse can stay in the home without triggering reverse mortgage repayment
3. The reverse mortgage remains in place; no forced repayment
4. The remaining spouse can continue to access the line of credit if needed
5. When both spouses have passed or the last surviving spouse moves to care, the home must then be sold and the RM repaid

This is the critical protection a reverse mortgage gives you. It means your surviving spouse doesn't have to choose between:

• Staying in the home with a massive care bill AND mortgage payments
• Selling the home to pay for care
• Moving out to make ends meet

They can stay home while the other spouse gets care.

How to Position Your Reverse Mortgage for Long-Term Care Costs

If you're getting a reverse mortgage specifically to prepare for potential long-term care, structure it this way:

Amount to borrow:

• Calculate: (Average yearly care cost) × (Years before likely need) + Emergency buffer
• Example: $70,000/year × 3 years = $210,000 + $40,000 buffer = $250,000 total
• Don't borrow the full amount you qualify for; borrow what you actually need to forecast

Access method: Line of Credit (not lump sum)

• Lump sum tempts you to spend it
• A line of credit lets it sit and grow (if you don't draw on it, the interest compounds against the credit line, not your actual borrowing)
• Wait, that's wrong—if you don't draw it, you don't pay interest
• Access it as needed; pay interest only on what you actually use

Emergency fund strategy:

• Keep 30-40% of your available credit line as true emergency reserves
• Use draws for long-term care costs as they arise
• This spreads the interest cost over time instead of all up-front

Documentation:

• Create a simple document for your spouse/executor explaining the reverse mortgage
• Include: account number, how to access funds, when it should be used (e.g., "when Bill needs long-term care")
• Make sure your spouse knows it exists and how to contact the lender

The Tax Implications

Good news: Reverse mortgage proceeds are not considered taxable income. If you use them for long-term care costs, there's no tax consequence.

Better news: Many long-term care costs are eligible for the Eligible Dependent Amount on your income tax if you're claiming care costs for a spouse or dependent. Consult your accountant about tax implications of your specific situation.

Watch out for: If you have a will that you think specifies equal inheritance to all children, but you've used a reverse mortgage, your actual estate will be smaller. Update your will to reflect this, or your children might have disputes later about fairness.

Protecting Your Spouse: Power of Attorney and Estate Planning

Before you get a reverse mortgage, ensure your spouse has:

1. Power of Attorney for Property — If you become incapacitated, your spouse can manage the reverse mortgage account and make draws as needed
2. Power of Attorney for Personal Care — If you need long-term care, your spouse (or another trusted person) can make healthcare decisions
3. A clear will — Specify that if one spouse needs care and the RM is tapped, the other spouse is protected
4. Updated life insurance beneficiaries — Ensure your spouse is named

For your spouse:

• Give them a copy of the reverse mortgage statement and account information
• Tell them HOW to access the account and who to call
• Discuss the plan in advance: "If I need long-term care, here's how we use this"
• Make sure they're comfortable with the plan

According to the Family Caregivers Network Ontario, caregiving spouses often report feeling overwhelmed by finances during their partner's care. Giving them a clear plan and access to funds dramatically reduces their stress and allows them to focus on caregiving quality.

The Emotional Reality: Accessing Equity as a Couple Ages

This is the hardest part to talk about, but important:

Getting a reverse mortgage is acknowledging: "We might not be able to stay in this home together forever." That's a heavy realization, especially for couples who've owned the home for 40+ years.

Some couples struggle with this psychologically:

• Guilt: "We should be able to afford our own care"
• Shame: "We're mortgaging our kids' inheritance"
• Denial: "We'll never need this"
• Anxiety: "Once we do this, is it a sign things are falling apart?"

It's worth processing these feelings before you commit. Some couples do this with a therapist, financial counselor, or trusted advisor. Others talk it through with trusted friends or family.

Reframe it this way: A reverse mortgage is not an admission of failure. It's a plan for success—ensuring that if one spouse needs care, the other can stay in their home and maintain their life while providing support. That's actually a beautiful thing.

Quick Reference: Pre-Long-Term-Care Financial Planning

Step	Timeline	Action
Health is good	Age 70-75	Assess long-term care risk; explore reverse mortgage
First health concern	As soon as diagnosed	Get reverse mortgage immediately (before quality further declines)
Arrange reverse mortgage	30-45 days	Close the RM while you still can
Set aside emergency fund	Immediately	Keep 30-40% of credit line available
Update powers of attorney	Immediately after RM closes	Ensure spouse knows how to access funds
Inform your executor	Before you need care	Tell them the RM exists; how to handle at death
Review your will	Before you need care	Adjust inheritance expectations given RM
Check in annually	Every year	Review your care plan; adjust if needed

Frequently Asked Questions

If both of us are in long-term care, what happens to the house?

The reverse mortgage becomes due. Your estate must repay it from the sale of the home, or your children must arrange refinancing if they want to keep the property. This is why having a clear plan and good legal documents matters.

Can we get a reverse mortgage if my spouse already has early dementia?

Yes, but it's more complicated. The spouse with dementia might not be able to be a joint borrower if they can't understand the agreement. Only the cognitively intact spouse would be the borrower. Consult a lawyer before proceeding.

What if one spouse enters care and the other dies while they're in care?

The estate must repay the reverse mortgage. If there are remaining assets, great. If the home must be sold, the reverse mortgage is paid from proceeds. The parent in long-term care might need to transition to a publicly funded bed or your children might need to help with costs. This is why planning ahead matters.

Is getting a reverse mortgage before long-term care "selfish"?

No. It's protective. You're ensuring your spouse and remaining family have resources to manage a difficult situation. That's the opposite of selfish.

What if we never need long-term care?

Then you have a line of credit available for any other need (home repairs, family emergency, health costs) and it eventually goes to your estate. It was worth the closing cost for the peace of mind and flexibility.

The Bottom Line

The best time to get a reverse mortgage to protect against long-term care costs is before you actually need it. Once one partner is ill or declining, the options shrink. Plan proactively, get the reverse mortgage while you're both healthy enough to qualify, and structure it to protect your surviving spouse.

Long-term care doesn't have to mean losing your home or displacing your surviving spouse. With a reverse mortgage plan, it means maintaining stability during a difficult time.

Speak with Rick Sekhon Reverse Mortgages about structuring a reverse mortgage that protects you and your spouse if long-term care becomes necessary.

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