Downsizing in Retirement: Mortgage Considerations
Selling the family home and moving to something smaller is a common retirement strategy. Whether you’re leaving Calgary for a quiet life in the Kootenays, or simply want less maintenance, here’s what to consider from a mortgage perspective.
Will You Need a Mortgage?
Many downsizers assume they’ll be mortgage-free. But depending on your market and the price difference, that may or may not be true. In 2024:
- Selling a Calgary home: Median single-family price around $600,000-$700,000
- Buying a Nelson condo or townhouse: $400,000-$600,000
- Buying a small-town BC property: Wide range depending on location
After selling costs (real estate commission, legal fees, moving), your net proceeds may require a small mortgage to bridge the gap — or you may have surplus funds.
Qualifying in Retirement
If you do need a mortgage, can you qualify on retirement income? Yes, with some considerations:
- Pension income: Fully usable for qualification
- CPP/OAS: Fully usable (grossed up by some lenders)
- RRSP/RRIF income: Usable, typically at face value
- Investment income: Varies by lender — some use dividends and interest, some require 2-year history
💡 No Age Limit
There’s no maximum age for getting a mortgage in Canada. Lenders care about income and credit, not your birthday. We’ve helped clients in their 70s and 80s secure mortgages for downsizing moves.
Alternative: All-Cash Purchase
If you have sufficient equity, buying outright has obvious appeal — no monthly payments. But consider:
- Do you want all your wealth in real estate?
- Would invested funds provide useful income?
- Current mortgage rates vs investment returns
💰 Strategic Thinking
A small mortgage isn’t always bad. If mortgage rates are 5% but you can earn 4-5% on conservative investments, keeping some funds liquid while carrying a small mortgage may make sense for flexibility and diversification.
Timing Your Move
The logistics of downsizing involve selling and buying, often in different markets. Options include:
- Sell first: Know your budget with certainty, but need interim housing
- Buy first: Requires bridge financing or carrying two properties briefly
- Synchronized closing: Ideal but requires careful coordination
Elevation Mortgage
INDEPENDENT MORTGAGE BROKERS · LICENSED AB & BC
Julie & Andy Jeffery — independent mortgage brokers serving Calgary, Nelson BC,
and clients across Alberta and British Columbia.
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