What is a CHIP Reverse Mortgage?
Income Today. Your Home For a Lifetime.
It's where you raised your family and built your memories. When something means this much to you, it can be hard to think about the challenges. But challenges do exist.
If you're like many Canadians, you've spent much of your life working hard and diligently making your mortgage payments. Yet now that you need income the most, there’s a good chance the bulk of your net worth is locked up as equity in your home. Fortunately there's a solution. By choosing the CHIP Reverse Mortgage, you receive income in your lifetime while retaining full control of the place where you rest your head.
Security. Ownership. Flexibility - CHIP Reverse Mortgage
The CHIP Home Income Plan, now called a CHIP Reverse Mortgage, was created by HomEquity Bank, a Schedule 1 Canadian Bank. It was founded 30 years ago as an annuity based solution addressing the financial needs of Canadians who want to access the equity of their top asset – their home.
A Secure Source of Income
Simply put, a CHIP Reverse Mortgage is a loan secured by your home with a big difference. With CHIP, you do not have to make any payments interest or principal for as long as you or your spouse live there. All you have to do is keep your property in good maintenance, pay your property taxes and property insurance.
Designed with Homeowners in Mind
At your stage of life, excessive risk is the last thing you need. That’s why we specifically designed the CHIP Reverse Mortgage to be financially sound. You maintain full ownership of your home. And we guarantee you’ll never owe more than the fair market value at the time it is sold, so you can rest assured your CHIP Reverse Mortgage will never be a burden to your heirs.
A Canadian Solution
A reverse mortgage is a mortgage designed specifically for the changing financial needs of seniors. You must be 55 or older and own a home or condo to qualify for a reverse mortgage in Canada. Unlike a traditional mortgage, a reverse mortgage does not require a set payment schedule. You can make monthly interest payments if you want to, but most people choose to pay back the mortgage when they sell their home.
As a certified reverse mortgage specialist who has been working over the past decade with CHIP – our only national provider of reverse mortgages in Canada, I am pleased to provide the benefits of this niche mortgage product.
Find out how much you qualify for and receive your FREE Reverse Mortgage Canada handbook by filling out our Online Estimate Request. Alternatively, feel free to contact Lorne Andrews at (416)276-6445
Benefits of a Reverse Mortgage
Unlock your Home Equity with a trusted lender
Our lender, CHIP Home Income Plan, is the only national provider of reverse mortgages in Canada. CHIP has been Canada’s leading provider of reverse mortgages for more than 25 years. CHIP is a trusted partner with all the major banks in Canada, with foreign and regional banks, wealth management companies and mortgage brokers.
You choose how to receive up to 55% of your home’s appraised value
We’ll tailor your CHIP reverse mortgage to specifically meet your needs. Once approved, you decide how much you want to take and when you want to take it. You can take the entire amount in a lump sum, or take a little now and more as needed. You can also choose planned advances, deposited into your bank account monthly, quarterly, semi-annually, or annually over a set period of time.
You maintain ownership and control of your home
A CHIP reverse mortgage does not give up ownership of your home. Just like a traditional mortgage, a reverse mortgage is registered on title, but your home always remains in your name. You can sell or move any time you want to. You can also pay back the reverse mortgage any time you want to.
You receive the money tax-free which does not affect government benefits you may receive
The money you receive is not taxable income and will not affect government benefits you may currently receive, such as Old Age Security (OAS) pension, or the Guaranteed Income Supplement (GIS).
You and your estate are well protected
Unlike traditional lending, there is ZERO risk of ever losing your home – even if it depreciates in value over time. With other traditional loans, such as a line of credit, the loan can be recalled or you may default on your loan and lose your home altogether. With a CHIP reverse mortgage there is no risk of default and the loan is guaranteed never to exceed the fair market value of your home.
You decide what to do with the remaining home equity
In over 25 years of experience, 99% of CHIP Home Income Plan clients have money left over when the loan is repaid. The reason:
- the reverse mortgage is ultra conservative (only up to 50% of the appraised home value).
- the fact that house prices, over the long-term, continue to appreciate in value for most homes.
Frequently Asked Questions
Why would I want a Reverse Mortgage?
For the majority of Canadians, owning a home provides a sense of financial security and pride. But it doesn’t do any good having all of your equity stuck between four walls and a roof! Aside from actually selling your home, the safest way to access some of your equity is through a reverse mortgage. And with no monthly payment schedule, a reverse mortgage gives you the freedom to go from planning your retirement, to turning your retirement dreams into reality.
What are some common uses of a Reverse Mortgage?
Here’s how some of our clients have used the equity in their home to improve their retirement lifestyle:
- Invested the proceeds to supplement retirement income
- Helped grandchildren with their education
- Renovated to improve home value & enjoyment
- Eliminated existing debt which required monthly payments (credit card, mortgage, or line of credit)
- Able to travel more often
- Purchased an investment property
- Purchased a recreational property or timeshare
How much money do I qualify for?
How much money do I qualify for? The amount of money you will qualify for depends on your age and your appraised home value. To find out how much you may qualify for, please fill out our online estimate request.
Is my home still mine?
Absolutely. A CHIP reverse mortgage does not give up ownership of your home. Just like a traditional mortgage, a reverse mortgage is registered on title, but your home always remains in your name. You can sell or move any time you want to. You can also pay back the reverse mortgage any time you want to.
Why is the interest rate higher on a reverse mortgage than a normal mortgage?
Interest on a reverse mortgage is typically higher because you can choose to never make an interest payment for as long as you’re living in your home. You’ll still benefit from your home appreciating in value and the loan is guaranteed to never exceed the fair market value of your house.
If I never make a payment, how much money will be left when I sell my home?
In over 21 years of experience, 99% of CHIP Home Income Plan clients have money left over when the loan is repaid – about 50% on average. The reason:
- the reverse mortgage is ultra conservative (only up to 40% of the appraised home value)
- the fact that house prices, over the long-term, will continue to appreciate in value for most homes
We will be happy to provide you with a detailed projection of how much money will be left.
What if housing prices plummet?
If house prices in Canada plummet, you and your estate are well protected. With a CHIP reverse mortgage there is no risk of default and the loan is guaranteed never to exceed the fair market value of your home.
I am moving in less than 1 year – do I have to pay back my reverse mortgage?
With a CHIP reverse mortgage, you are able to sell or move at any time. If you are planning on moving & do not want to pay back your reverse mortgage, CHIP makes it easy for you to port your mortgage to your new home. Please contact us if you are planning on moving.
How much does a Reverse Mortgage Cost?
There are three costs to set-up a reverse mortgage:
- House Appraisal – this usually costs between $200 – $400+ depending on where you live.
- Independent Legal Advice – CHIP Home Income Plan requires all legal documentation to be signed in front of a lawyer. If you don’t have a legal advisor, we will be happy to introduce you to one in your area that is familiar with reverse mortgages. Legal Advice usually costs between $300 – $600.
- Legal Fees and Closing Costs – CHIP Home Income Plan charges $1,495 to cover administration and legal fees for setting up the reverse mortgage.
All of the above costs can be deducted from the proceeds of your reverse mortgage. Once completed, there are no ongoing fees, renewal costs or any other fees for as long as you have your reverse mortgage.
When is the reverse mortgage due?
The reverse mortgage is due when you sell your home, or when you pass away and your estate sells your home.
Can I get a reverse mortgage on my cottage?
Yes, but depending on where you live, it may be more advantageous to set-up your reverse mortgage on your primary residence.