Using a Reverse Mortgage to Fund Retirement Travel in Canada

"We worked for 35 years, paid off the house, and now we can't afford to go anywhere." It is a frustration Rick Sekhon hears regularly from Ontario retirees who are asset-rich but cash-poor. Their home is worth $600,000, $800,000, or more — but their monthly pension and government benefits barely cover the basics, let alone the travel they dreamed of during all those working years. A reverse mortgage can turn that locked-up equity into the retirement travel fund you never had.

This guide explores how Canadian retirees are using reverse mortgages to fund everything from extended snowbird winters in Florida to bucket-list trips abroad — and what you need to know about costs, residency rules, and making the numbers work.

Why Retirement Travel Is More Than a Luxury

Travel in retirement is not frivolous. Research consistently shows that active, engaged retirees who travel regularly report higher life satisfaction, better physical health, and stronger cognitive function. Yet for many Canadian seniors, travel is the first line item cut from the budget when fixed income meets rising costs.

Retirement Expense Category	Average Monthly Cost (Ontario, 2026)	Priority Level
Housing (property tax, insurance, maintenance)	$800–$1,500	Essential
Food and household	$600–$900	Essential
Utilities and communication	$300–$500	Essential
Transportation	$400–$700	Essential
Healthcare and medications	$200–$600	Essential
Travel and leisure	$0–$500	Often cut first
Gifts and charitable giving	$100–$300	Often cut

When CPP, OAS, and a modest pension total $2,500–$3,500 per month, there is simply nothing left for travel after essentials are covered. The irony is that many of these same retirees sit on hundreds of thousands of dollars in home equity that they cannot access through traditional means without selling.

According to Statistics Canada, Canadian seniors aged 65–74 spent an average of $2,200 per year on travel in 2023 — but this average masks a significant gap between those with robust pensions and those on fixed government benefits alone.

How Retirees Use Reverse Mortgages for Travel

There are no restrictions on how you use reverse mortgage proceeds. HomeEquity Bank (CHIP), Equitable Bank, Bloom Financial, and Home Trust all disburse funds without conditions on spending. Many Ontario retirees use their funds specifically for travel in several ways:

The Snowbird Fund

The most common travel use is funding a snowbird lifestyle — spending 3–5 months in a warmer climate during Ontario's winter. Typical costs include:

Snowbird Expense	Annual Cost Estimate
Seasonal rental (Florida/Arizona, 3–4 months)	$8,000–$18,000
Travel insurance (age 65–75)	$1,500–$4,000
Flights (2 return trips)	$800–$2,000
Vehicle costs (U.S. car or rental)	$2,000–$5,000
Daily living expenses (above Ontario baseline)	$3,000–$6,000
Total annual snowbird cost	$15,300–$35,000

A reverse mortgage lump sum of $150,000–$250,000 can fund a snowbird lifestyle for 5–15 years, depending on spending levels. For a comprehensive guide to the snowbird rules and requirements, see our dedicated reverse mortgage for snowbirds guide.

The Bucket-List Trip

Some retirees do not want annual travel — they want one or two significant trips they have always dreamed of. A river cruise through Europe, a month in Australia visiting family, an African safari. These trips typically cost $10,000–$30,000 per person and are simply out of reach on a fixed government income.

A reverse mortgage draw of $20,000–$60,000 can fund these once-in-a-lifetime experiences. The interest cost over time is real (discussed below), but for many seniors, the trade-off between equity and experience is one they make gladly.

The Regular Travel Budget

Other retirees use a reverse mortgage to create a modest but consistent annual travel budget — $5,000–$10,000 per year for domestic trips, visits to family across Canada, or short warm-weather vacations. Over 10–15 years, this adds up to $50,000–$150,000 in travel spending funded by home equity.

The Cost of Travel Funding: Interest Projections

Every dollar you draw from a reverse mortgage accrues compound interest. Understanding this cost is essential to making an informed decision.

Lump Sum for Travel: Interest Cost Over Time

Amount Drawn	Rate	Balance After 5 Years	Balance After 10 Years	Balance After 15 Years
$50,000	6.99%	~$70,700	~$100,000	~$141,400
$100,000	6.99%	~$141,400	~$200,000	~$282,700
$150,000	6.99%	~$212,100	~$299,900	~$424,100
$200,000	6.99%	~$282,700	~$399,900	~$565,500

Rates are illustrative. Actual rates vary by lender and borrower profile.

A $50,000 travel fund drawn at age 68 would grow to approximately $100,000 by age 78 and $141,400 by age 83. Is the cost worth it? That depends entirely on how you value the experience versus the equity.

Rick Sekhon often frames it this way: "If your home is worth $700,000 and you draw $50,000 for travel, and the balance grows to $141,000 over 15 years — your home has likely appreciated to $900,000+ in that same period. You have funded 15 years of travel and still have significant equity remaining."

The Appreciation Offset

Ontario home values have historically appreciated at 3–5% annually over the long term. This appreciation often offsets or even exceeds the interest accruing on the reverse mortgage balance.

Year	Home Value (3.5% annual growth)	Reverse Mortgage Balance ($100K at 6.99%)	Net Equity
0	$700,000	$100,000	$600,000
5	$831,000	$141,400	$689,600
10	$987,000	$200,000	$787,000
15	$1,172,000	$282,700	$889,300

In this scenario, net equity actually increases over time despite the reverse mortgage — because the home appreciates faster than the loan balance grows. This is not guaranteed (real estate values can stagnate or decline), but it illustrates why a reverse mortgage for travel is not the equity-destroying decision some people fear.

For detailed interest projections, see our compound interest projections guide.

The Principal Residence Rule: You Must Still Live in Canada

This is the most important rule for travellers with a reverse mortgage: your Ontario home must remain your principal residence. Every reverse mortgage lender in Canada requires this, and violating it can trigger a demand for full repayment.

The 183-Day Rule

You must spend at least 183 days per year (6 months and 1 day) living in your Ontario home. This means your total travel — whether to one destination or multiple — cannot exceed approximately 182 days in any calendar year.

Travel Duration	Within Rules?	Notes
3 months in Florida (Jan–Mar)	✓ Yes	Well within 182-day limit
4 months snowbird + 2-week summer trip	✓ Yes	Total ~130 days away
5 months snowbird + 1-month Europe trip	✓ Yes	Total ~182 days — at the limit
6 months in Portugal + 2 weeks elsewhere	✗ No	Exceeds 182 days
Year-round travel with occasional Ontario visits	✗ No	Ontario is no longer principal residence

The CRA also monitors residency for tax purposes. If you spend more than 182 days outside Canada, you may trigger non-resident tax status, which has far-reaching implications beyond your reverse mortgage — including loss of OHIP coverage and potential impacts on OAS and GIS.

According to the Canada Revenue Agency, residential ties — including maintaining a home, having a spouse or dependants in Canada, and having personal property and social ties — determine tax residency. Your reverse mortgage home is one of your strongest residential ties.

Travel Insurance Considerations

Extended travel requires travel health insurance, and costs increase significantly with age. This is an often-overlooked expense that should be factored into your travel budget:

Age Range	Approximate Annual Travel Insurance (4-month trip)
55–64	$800–$2,000
65–74	$1,500–$4,000
75–84	$3,000–$8,000
85+	$5,000–$15,000+ (if available)

Pre-existing medical conditions can increase premiums further or result in exclusions. Rick Sekhon advises clients to obtain travel insurance quotes before committing to a travel budget, as the insurance cost can significantly affect the total amount needed.

Making the Numbers Work: A Planning Framework

Here is a practical framework for deciding how much to draw for retirement travel:

Step 1: Define Your Travel Goals

Be specific. "We want to travel" is not a plan. "We want to spend January through March in Florida for the next 10 years and take one European trip" is a plan you can budget for.

Step 2: Calculate Total Travel Budget

Travel Goal	Annual Cost	Years	Total Budget
Florida snowbird (3 months)	$18,000	10	$180,000
European bucket-list trip	$25,000	1	$25,000
Annual domestic trips	$4,000	10	$40,000
Travel insurance	$3,000	10	$30,000
Total			$275,000

Step 3: Determine Available Equity

Work with Rick Sekhon to determine your borrowing limit. Remember, you may not want to use the entire available amount for travel — you should reserve some capacity for emergencies, healthcare costs, or home maintenance.

Step 4: Consider Staged Draws

Rather than drawing $275,000 on day one (and paying interest on the full amount immediately), consider drawing funds in annual or semi-annual stages. This approach significantly reduces total interest cost:

Strategy	Total Drawn Over 10 Years	Estimated Interest Cost Over 10 Years
Full lump sum of $275,000 on day one	$275,000	~$245,000
Annual draws of $27,500 for 10 years	$275,000	~$120,000

The staged approach saves approximately $125,000 in interest over 10 years. This is a substantial difference that should inform your draw strategy. The trade-off is that staged draws require returning to the lender periodically — but this is straightforward with most providers.

What About Your Heirs?

One common concern is the impact on inheritance. Travel funded by a reverse mortgage reduces the equity your children or heirs will eventually receive. This is a legitimate consideration that deserves honest conversation.

Rick Sekhon encourages families to discuss this openly. Many adult children express support for their parents enjoying retirement travel, especially when they understand the numbers. A $100,000 reverse mortgage draw on a $700,000 home still leaves substantial equity — and the home's appreciation may offset the balance growth entirely.

For more on how reverse mortgages affect inheritance, see our inheritance guide and our guide for adult children.

As regulated by OSFI, all reverse mortgage lenders in Canada include a no-negative-equity guarantee, meaning you (or your heirs) will never owe more than the home is worth when it is sold. This provides a floor on the worst-case inheritance scenario.

Alternatives to Consider

Before committing to a reverse mortgage for travel, consider whether other options might work:

✓ TFSA withdrawals — tax-free and benefit-preserving, just like a reverse mortgage. If you have TFSA savings, use them first. ✓ Non-registered savings — taxable but may be more appropriate for smaller travel budgets. ✓ Downsizing — selling your home and using the proceeds for both housing and travel. See our reverse mortgage vs downsizing guide.

✗ HELOC — requires monthly payments, which defeats the purpose for fixed-income retirees. ✗ Credit cards — high interest rates make this an expensive and risky option. ✗ Borrowing from family — can create relationship strain and is not always available.

The Financial Consumer Agency of Canada (FCAC) recommends that seniors explore all available options and seek independent advice before accessing home equity for discretionary spending. This is sound advice — a reverse mortgage is a powerful tool, but it should be part of a considered plan.

Frequently Asked Questions

Can I use reverse mortgage funds for any type of travel?

Yes. There are absolutely no restrictions on how you spend reverse mortgage proceeds. You can use them for snowbird living, cruise vacations, visiting family abroad, RV travel across Canada, or any other travel purpose.

Do I need to tell my lender I am travelling?

For short trips (under 60 days), notification is generally not required. For seasonal absences like snowbird travel, most lenders expect written notification. See our snowbird guide for lender-specific notification requirements.

What happens if I decide to move abroad permanently?

If you permanently leave your Ontario home, the reverse mortgage becomes due and payable — typically within 6–12 months. The home would be sold and the reverse mortgage balance repaid from the proceeds. You would receive any remaining equity. Permanently relocating abroad is not compatible with maintaining a reverse mortgage.

Is it irresponsible to use home equity for travel?

This is a personal values question, not a financial one. From a strictly financial perspective, if you have significant home equity, limited other assets, and a strong desire to travel, a reverse mortgage is one of the most tax-efficient and flexible ways to fund it. The key is to borrow intentionally and understand the long-term cost.

Can I make interest payments to reduce the balance while I travel?

Yes. Most lenders — including HomeEquity Bank and Equitable Bank — allow voluntary interest-only or partial interest payments at any time. If you have some months where travel expenses are lower, making a voluntary payment can slow the balance growth.

How much of my home equity should I use for travel versus other needs?

Rick Sekhon typically recommends reserving at least 30–40% of your available reverse mortgage limit for non-travel needs — emergencies, healthcare, home repairs. This ensures you have a financial cushion beyond your travel fund.

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