Reverse Mortgage Closing Costs in Ontario: Complete Breakdown

"How much does it actually cost to close a reverse mortgage?" Ontario homeowners considering a reverse mortgage deserve a transparent, line-by-line answer. The good news: closing costs for a reverse mortgage are modest compared to selling a home, and most can be deducted directly from your loan proceeds — meaning little or no money out of pocket. This guide breaks down every cost you will encounter, compares fees across all four major lenders, and explains exactly what to expect at closing.

Every Closing Cost Itemized

Reverse mortgage closing costs in Ontario fall into several distinct categories. Each cost serves a specific purpose in the lending process, and all are standard for secured lending in Canada. There are no hidden fees — FSRAO (Financial Services Regulatory Authority of Ontario) and the FCAC (Financial Consumer Agency of Canada) both require full disclosure of all costs before you sign.

Appraisal Fee: $300–$500

A professional home appraisal is required by every reverse mortgage lender. The appraiser must be accredited by the Appraisal Institute of Canada (AIC) and is ordered independently by the lender — you do not choose the appraiser.

Factor	Detail
Typical cost	$300–$500
Higher end range	$500–$600 for rural, waterfront, or unique properties
Who pays	Borrower (deducted from proceeds or paid upfront)
Timeline	7–14 days in urban Ontario; 14–21 days in rural areas
Purpose	Determines fair market value for borrowing limit calculation

The appraisal is one of the first steps in the process. If the appraised value comes in lower than expected, your borrowing limit will be reduced proportionally. For a complete guide, see our article on the reverse mortgage appraisal process in Ontario.

Independent Legal Advice (ILA): $800–$1,500

Ontario law requires every reverse mortgage borrower to receive independent legal advice (ILA) before closing. This means you must retain your own lawyer — separate from the lender's legal counsel — who will review the mortgage terms, explain your rights and obligations, and ensure you understand the agreement.

Factor	Detail
Typical cost	$800–$1,500
What it includes	Lawyer review of mortgage terms, title search, mortgage registration, closing
Who pays	Borrower (deducted from proceeds or paid directly)
Is it optional?	No — it is legally required
Can I use a family member who is a lawyer?	Generally no — must be independent from the transaction

Your lawyer handles more than just signing documents. They conduct a title search to confirm ownership, register the mortgage against the property title, arrange for title insurance, and ensure any existing mortgages or liens are properly discharged.

According to the Law Society of Ontario, lawyers providing independent legal advice must ensure the client understands the nature and consequences of the transaction. This is a consumer protection measure, not a formality.

Some borrowers find a lawyer who charges $800 for the full package. In larger urban centres like Toronto or Ottawa, fees are more commonly $1,000–$1,500. Rick Sekhon can recommend experienced real estate lawyers in your area who are familiar with reverse mortgage closings.

Lender Setup / Administration Fee

This is the fee charged by the reverse mortgage lender to underwrite, process, and set up your loan. It varies significantly between lenders.

Lender	Setup Fee	Notes
CHIP (HomeEquity Bank)	$1,795	The largest upfront fee; covers underwriting and administration
Equitable Bank	$995	Significantly lower than CHIP
Bloom Financial	~$1,500	May vary by product and province
Home Trust	Varies	Contact for current fee schedule

The $800 difference between CHIP and Equitable Bank is worth noting. Over 10 years of compounding at 7.50%, that $800 difference grows to approximately $1,650 — a meaningful but not deal-breaking amount. The setup fee should be one factor in your lender comparison, not the only factor.

Title Insurance: $200–$400

Title insurance protects the lender (and in some cases the borrower) against defects in the property title — such as unregistered liens, encroachments, survey errors, or fraud. It is a one-time premium paid at closing.

Factor	Detail
Typical cost	$200–$400
Who pays	Borrower (deducted from proceeds)
Coverage	Lender's interest in the property title
Provider	FCT, Stewart Title, or Chicago Title (arranged by your lawyer)
Is it optional?	No — required by all lenders

Title Search and Registration: $150–$350

Your lawyer conducts a title search through the Ontario Land Registry to confirm ownership, check for liens or encumbrances, and then registers the new reverse mortgage against the property. This cost is included in your lawyer's overall fee in many cases but may be itemized separately.

Existing Mortgage Discharge Fee: $250–$500 (If Applicable)

If you currently have a mortgage, HELOC, or other secured debt registered against your property, it must be discharged (paid off and removed from title) before or simultaneously with the reverse mortgage closing. Your existing lender charges a discharge fee.

Scenario	Typical Cost
Discharge of existing conventional mortgage	$250–$400
Discharge of HELOC	$250–$350
Prepayment penalty on existing mortgage (if applicable)	Varies — could be thousands
Assignment fee (if mortgage is being assumed)	Not applicable to reverse mortgages

Any outstanding balance on your existing mortgage or HELOC is paid directly from the reverse mortgage proceeds at closing. This is one of the most common uses of a reverse mortgage — eliminating monthly mortgage payments by paying off the existing balance.

For more on this strategy, see our guide on paying off a mortgage with a reverse mortgage.

Complete Closing Cost Comparison by Lender

The following table provides a comprehensive side-by-side comparison of total estimated closing costs across all four major Canadian reverse mortgage lenders.

Cost Item	CHIP (HomeEquity Bank)	Equitable Bank	Bloom Financial	Home Trust
Setup / admin fee	$1,795	$995	~$1,500	Varies
Home appraisal	$300–$500	$300–$500	$300–$500	$300–$500
Independent legal advice + closing	$800–$1,500	$800–$1,500	$800–$1,500	$800–$1,500
Title insurance	$200–$400	$200–$400	$200–$400	$200–$400
Title search / registration	$150–$350	$150–$350	$150–$350	$150–$350
Total estimated closing cost	$3,245–$4,545	$2,445–$3,745	$2,950–$4,250	Varies

Equitable Bank offers the lowest total closing costs, primarily due to its lower setup fee. However, CHIP from HomeEquity Bank remains the most widely used reverse mortgage in Canada and may offer advantages in terms of product flexibility, term options, and geographic coverage.

According to HomeEquity Bank, the CHIP Reverse Mortgage has been available in Canada since 1986, making it the longest-standing reverse mortgage product in the country. The setup fee reflects the cost of specialized underwriting, legal registration, and dedicated servicing infrastructure.

Rick Sekhon compares all available lenders and recommends the option that offers the best combination of rate, fees, and terms for your specific situation.

How Closing Costs Are Deducted From Proceeds

One of the key advantages of a reverse mortgage is that closing costs can be deducted from your loan proceeds rather than paid out of pocket. Here is how this works in practice.

Example: $200,000 Reverse Mortgage Through CHIP

Item	Amount
Gross reverse mortgage advance	$200,000
Less: CHIP setup fee	($1,795)
Less: Appraisal fee	($450)
Less: Legal fees and title insurance	($1,400)
Less: Existing mortgage payout	($85,000)
Net cash to borrower	$111,355

The borrower receives $111,355 in cash (or by direct deposit) and has no out-of-pocket expense at closing. The $88,645 difference covers the closing costs and the existing mortgage payout. The total balance owing from day one is $200,000, which includes the rolled-in fees.

The Compounding Effect of Rolled-In Fees

There is a small but real cost to rolling fees into the loan: those fees begin compounding immediately as part of the loan balance.

Rolled-In Costs	Compounding Cost Over 10 Years (at 7.50%)	Total Added to Final Balance
$3,500	~$3,367	~$6,867
$4,500	~$4,329	~$8,829

On $3,500 in rolled-in closing costs, the additional compounding over 10 years adds approximately $3,367 to your final balance. In context — on a $200,000 loan that will grow to roughly $418,000 over 10 years — this is a modest incremental cost. But it is worth knowing.

If you prefer, you can pay some or all closing costs out of pocket to avoid this compounding effect. Rick Sekhon can advise on which approach makes more sense for your situation.

Closing Costs vs Other Home Equity Options

How do reverse mortgage closing costs compare to the alternatives?

Option	Typical Upfront / Transaction Costs	Monthly Ongoing Cost
Reverse mortgage	$2,500–$4,500 (closing costs)	$0 (no payments required)
HELOC setup	$0–$500 (many HELOCs have minimal setup costs)	Monthly interest payments required
Selling your home	$40,000–$80,000+ (agent commission, legal, LTT, moving)	Rent or new housing costs
Private mortgage	$2,000–$5,000+ (legal, broker fees, lender fees)	Monthly interest payments required
Home equity loan	$500–$2,000	Monthly principal + interest payments

Reverse mortgage closing costs are significantly less than the cost of selling, and comparable to other secured lending products. The key difference is the no monthly payment feature — once closing costs are covered, there is no ongoing cash obligation.

For a full comparison of reverse mortgages and selling, see our guide on reverse mortgage vs selling and renting in Ontario.

What Is NOT Included in Closing Costs

It is equally important to understand what you will not be charged:

• ✓ No land transfer tax — a reverse mortgage is a loan, not a property purchase
• ✓ No mortgage default insurance (CMHC insurance) — not required for reverse mortgages
• ✓ No application fee — neither CHIP nor Equitable Bank charges a fee to apply
• ✓ No ongoing servicing fee — annual statements and account management are included
• ✓ No income verification costs — reverse mortgages do not require proof of income

These "no costs" represent meaningful savings compared to conventional mortgages, where CMHC insurance alone can cost thousands of dollars.

How to Minimize Closing Costs

1. Compare lenders. The $800 difference in setup fees between CHIP and Equitable Bank is real money. Rick Sekhon shops all available lenders to find the best rate and fee combination.
2. Ask about fee promotions. Lenders occasionally offer reduced or waived setup fees during promotional periods. Rick Sekhon stays current on all active promotions.
3. Choose a cost-effective lawyer. Legal fees vary widely. A lawyer experienced with reverse mortgage closings may be more efficient — and therefore less expensive — than one doing it for the first time.
4. Bundle with existing mortgage discharge. If your lawyer is also handling the discharge of an existing mortgage, they may offer a reduced total fee for the combined work.
5. Pay what you can out of pocket. Any closing cost paid directly (rather than rolled in) avoids compounding. Even paying the appraisal fee out of pocket saves you roughly $350 in compounding over 10 years.

FAQ

Are reverse mortgage closing costs tax-deductible? Generally no. The CRA does not allow deduction of closing costs for personal-use borrowing. If the reverse mortgage funds are used for investment purposes, some costs may be deductible — consult a tax professional. See our CRA tax treatment guide for details.

Can I negotiate the lender setup fee? The setup fee is generally fixed. However, during promotional periods, lenders sometimes reduce or waive the fee. Rick Sekhon will inform you of any active promotions. Additionally, competitive pressure from multiple lender quotes can sometimes result in fee concessions.

Do I need to bring any money to the closing appointment? In most cases, no. All closing costs can be deducted from your reverse mortgage proceeds. However, if your loan amount is very close to the minimum advance or if you prefer to pay costs out of pocket to reduce compounding, you may choose to bring funds. Your lawyer will provide a statement of adjustments before closing.

How long does the closing process take? From application to closing, a typical Ontario reverse mortgage takes 3–5 weeks. The closing appointment itself — where you sign documents at your lawyer's office — takes approximately 1–2 hours. Funds are typically available within 1–3 business days after closing. For the full timeline, see how long a reverse mortgage takes in Ontario.

What if I change my mind after closing? Ontario law does not provide a statutory cooling-off period for reverse mortgages. However, if you repay the loan quickly, the penalty on a short-term open product is minimal. This is why OSFI-regulated lenders require independent legal advice before closing — to ensure you are fully committed before signing.

Are closing costs different for condos vs houses? Appraisal fees may be slightly lower for condos (due to simpler comparables), and legal costs are generally the same. However, the lender setup fee and title insurance are identical regardless of property type. For condo-specific considerations, see our guide on reverse mortgages for Ontario condos.

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Speak to a licensed mortgage professional. Independent legal advice is required before closing a reverse mortgage in Ontario.

Get your free Ontario Reverse Mortgage Guide →

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This content is for illustrative purposes only. Rates may vary. Call Rick Sekhon for the best rates and more information.