Why You Should Consider Getting A Chip Reverse Mortgage

You have worked very hard in life and you want to live life on your own terms. However, most Canadian homeowners age  55+ would like to finance their retirement without having to sell their own homes to access equity. According to research conducted by Home Equity, more than 90% of older Canadians, want to live out their retirement in their existing homes and community. If you want to spend time enjoying your family in your home, then this article is for you. But how do you get access to equity, without selling your home? Introducing the Chip Reverse Mortgage

Firstly what is a CHIP Reverse Mortgage?

A CHIP Reverse Mortgage is a program for Canadian homeowners aged 55+ that would like to finance their retirement. This mortgage plan allows you to access 55% of your home equity and convert it into tax-free cash, while still occupying your primary residence or home. Unlike a regular mortgage where you pay monthly payments, a reverse mortgage payment does not require regular mortgage payments or having to repay the loan, until you move out from your home or sell it. You always remain on the title and have total ownership and control of your home. The money received from this program is tax-free and can either be given as a  lump sum or in advance. When applying for this mortgage, the type of property, your home condition, appraised value and you and your spouse’s age ( and others on the title)  would be considered in the application.  

Who qualifies for this program? 

To be eligible for a CHIP Reverse Mortgage you must be

  • A Canadian homeowner
  • Aged 55 and older
  • The home in question must be your primary residence ( lived in for at least six months to a year)
  • $250,000 minimum home value
  • If you are married, you and your spouse must be aged 55 and older and have to be listed on the application, as well as all the people on your home title.  

**Note: the older you are and the more equity you have in your home determines the amount of money that would be lent to you.

Benefits of a reverse mortgage

  • Offers Financial flexibility – you either choose to get a lump sum or regular monthly payments.
  • No need to pay tax on the money you borrow.
  • A CHIP reverse mortgage does not affect the Old-Age security or Guaranteed Income Supplement benefits.
  • Freedom- the cash can be used to cover health care expenses, travelling, pay off debts or to even renovate your property!
  • Total ownership: Maintain control by still staying in your home, never having to move or sell even if there is an income change. 
  • No monthly payments till you either move or sell your home, default on the loan or if the last borrower dies.

Cons of a reverse mortgage

  • Higher interest rates due to no monthly payments.
  • You might have less money to give to your estate ( your kids or beneficiaries)
  • The costs to get this mortgage might be slightly higher than regular mortgages.

Interested in getting a CHIP reverse mortgage loan? Speak to one of our mortgage brokers today.