CHIP: Reverse Mortgages

So what IS a Reverse Mortgage you ask?

A reverse mortgage is a loan which is secured against your home – it allows you access to the equity that you’ve built up in your home.

The main reasons to get a reverse mortgage in Canada are:

  • Get approved without ANY CREDIT
  • Get approved without ANY INCOME
  • Do not pay mortgage payments, which are accrued within the mortgage
  • Is a tax fee way to use your home’s equity
  • Maintain ownership of your home
  • Amount you owe will never exceed the value of your property

Canada Home Income Plan (CHIP) Mortgage from HomEquity Bank

In Canada, reverse mortgages are provided by HomEquity Bank through a product called the Canada Home Income Plan, or CHIP for short.

This product is only available for Canadians 55 years old and older.

eitan pinsky mortgage expert teamReverse Mortgages Have a Bad Rep…

These particular loans have had a bad reputation in the past, particularly because of how they were handled in the United States. In Canada, only one company, HomEquity Bank, handles reverse mortgages. HomEquity Bank is federally regulated and they never require extra payment back for their mortgage, even if the mortgage exceeds the value of the home when sold.

Home Equity Line of Credit / Mortgage VS CHIP

A Home Equity Line of Credit (HELOC) is a mortgage/credit facility that allows homeowners to borrow money from a lender using the equity in their home.

The main, very glaring benefit of a HELOC over the CHIP reverse mortgage is that HELOCs have lower interest rates and lower fees. CHIPs higher cost means that the homeowner will have less to leave to their estate at the time of their death.

However, there are three very important reasons to get the CHIP mortgage:

  • No qualification criteria for the CHIP mortgage – HELOCs required qualification
  • No monthly payment – great for those who do not want to pay monthly costs
  • No re-qualification: HELOCs would require a client to requalify if a spouse passes away. In this instance, the bank may call the loan, forcing the client to sell and get out of their property. The CHIP mortgage does not have to be repaid until the sale of the home or the surviving partner passes away.

It is important to get the correct advice as to whether a reverse mortgage is for you or your loved ones… in everything that we do at Eitan Pinsky Mortgage Expert Team, we strive to protect the client and their interests. There are a lot of choices out there and not every choice is the best in every situation.

Eitan Pinsky Mortgage Expert Team

We are happy to discuss reverse mortgages and how it might fit into your overall financial plan with any new or existing clients –  we would be pleased to go over any questions you have about this type of mortgage product.