CHIP Reverse Mortgage

Wouldn’t it be nice if you had the money to do more of the things you want to do? A CHIP reverse mortgage could be just what you need. It’s the simple and sensible way to access the value in your home and turn it into cash to help you enjoy life on your terms.

Tax-Free Cash

A reverse mortgage is a safe way for Canadian homeowners 55 or older to turn up to 55%* of the value of their home into tax-free cash. It lets you retire safely and securely in the home you love.

You can use the money from a reverse mortgage to:

  • Pay off debts

  • Renovate your home

  • Take care of unexpected expenses

  • Help the ones you love

  • Enjoy the retirement you deserve

  • Travel

  • Purchase a vacation property

The amount you are eligible to receive with a reverse mortgage depends on the age of the youngest applicant, the value of your home, and the type and location of your property.

What is a reverse mortgage?

 

A reverse mortgage is a loan you take out against the value of your home. This loan program, sometimes called an ‘equity release,’ is designed exclusively for Canadians above the age of 55. Many people in this demographic have spent decades owning and maintaining their home, yet aren’t able to see any of the financial gains from it without selling. A reverse mortgage provides a tax-free, cash loan of up to 55% of your house’s value, allowing you to gain financial freedom without having to downsize and go through the hassle of selling your home.

With a reverse mortgage, lenders aren’t required to make loan repayments until they move out or sell their home, offering flexibility to people who want financial options without having to give up control and ownership of their home. Better yet, you are guaranteed by the CHIP reverse mortgage plan to never pay more than the market value of your home, and any appreciations in its value remain yours as well.

How does a reverse mortgage work?

 

If you’re a Canadian homeowner over the age of 55, you are already eligible for a reverse mortgage. The CHIP reverse mortgage can be used to pay off the loans secured with your home, as well as free up additional equity. After an initial consultation with a mortgage broker, you’ll find out how much of a loan you’re eligible for based on the value, type, and location of your home, at which point you’ll be all set to receive your payout.

With a reverse mortgage, lenders aren’t required to make loan repayments until they move out or sell their home, offering flexibility to people who want financial options without having to give up control and ownership of their home. Better yet, you are guaranteed by the CHIP reverse mortgage plan to never pay more than the market value of your home, and any appreciations in its value remain yours as well.

 

Why choose a reverse mortgage?

There are many reasons people choose to sign on for a reverse mortgage, especially compared to other retirement options.

Here’s a few of the largest benefits for people getting a CHIP reverse mortgage:

 

  • 1. You receive the money tax-free

    Payouts from a reverse mortgage are not considered taxable income, so they won’t interfere with setting up or continuing to receive government benefits such as old age security (OAS) or guaranteed income supplement (GIS).

  • 2. You can use the money any way you wish

    Maybe you need to cover unexpected expenses, or you simply want to enjoy your retirement. Perhaps you want to update your home or help your family without depleting your current savings. A reverse mortgage allows you this flexibility! The only condition is that any outstanding loans (e.g. existing mortgage or home equity line of credit) secured by your home must be paid out with the proceeds from your CHIP Reverse Mortgage. Everything else is up to you!

  • 3. No regular mortgage payments required

    Unlike mortgages or other standard loans, reverse mortgages don’t require you to make regular repayments. The full amount only becomes due when you and your spouse no longer live in the home. With that said, you always have the option of paying off the loan in full at any time.

  • 4. You maintain ownership and control of your home

    A reverse mortgage allows you financial freedom without having to give up your home. You will never be asked to move or sell to repay your CHIP Reverse Mortgage. All that’s required is that you maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.

  • You keep all remaining equity of your home

    In my many years of experience as a reverse mortgage broker, 99 out of 100 homeowners have money left over when their CHIP Reverse Mortgage is repaid. And on average, the amount left over is 50% of the value of the home when it is sold.

  • You can turn part of your home into cash assets without selling it

    The greatest benefit to a reverse mortgage is the ability to make money from your home without selling it. For many Canadians, their home makes up a large portion of their net worth. But no matter what that house is worth, it doesn’t help in terms of liquid finances for people who aren’t ready to move. A reverse mortgage is here to help people over the age of 55 live the way they want, giving them financial options that they otherwise wouldn’t have available.

 

 Who can qualify for a reverse mortgage?

  • Homeowner Age 55+

  • $200,000 Minimum Home Value

  • Must Be You Primary Residence

FAQs

Figuring out everything related to loans and reverse mortgages can be difficult. The number one way to understand how a reverse mortgage can help you specifically is by sitting down with a qualified mortgage broker, who will look at your unique situation and give you a good idea of what kind of reverse mortgage is possible. With that said however, there are a few frequently asked questions that may shed some light on the topic before your first meeting with a reverse mortgage broker.

How much money can I get from a reverse mortgage?

The answer to this question varies greatly from person to person. However, the CHIP reverse mortgage program allows you to borrow up to 55% of your home’s assessed value. The exact amount you’ll be eligible to borrow depends on a few factors: your age, the age of other people living in the home, the location of your home, the type of property, the condition of the home, and its overall appraised value.

How much does my home need to be worth to qualify?

When calculating the value of a home, the figure begins with the market appraisal. From here, it’s true equity is derived by subtracting any outstanding debts that have been secured against your home. With all these factors considered, your home must be valued at a minimum of $200,000 to secure a reverse mortgage.

Can I get out of my reverse mortgage early?

If you decide you want to get out of your reverse mortgage early, that option is always available to you. You’ll simply have to pay the principal sum plus any interest you’ve amassed to that point. You may also be subject to a fee for paying off the loan early.

Do I need to do anything differently to keep my reverse mortgage?

If you’re already doing your due diligence to maintain your home, then the answer is no! All that’s required is keeping up-to-date with home insurance, property taxes, and other homeowner’s fees, as well as generally maintaining the condition of the home. Aside from that, it will be business as usual!

How do I get started with a reverse mortgage?

If you’re ready to start living life on your terms, a reverse mortgage could be the best option for you. The first step to securing a reverse mortgage is to sit down for an initial consultation with a qualified broker. When you sit down with me to discuss your reverse mortgage options, I always strive to find a solution that works for each individual client. With almost twenty years of experience as a mortgage broker, I’ve identified an approach that helps people clearly understand the ins and outs of their reverse mortgage, helping them to feel confident as they enter the next stage of their life.

If you ask me, communication is key, and this could not be more true than when it comes to setting up a reverse mortgage. You want to be crystal clear on the details in order to feel confident in your decision, and that’s why I take the time and care with every client to ensure they’ve got all the information they need.

If you have more questions about reverse mortgages, or if you’re ready for an initial consultation, don’t hesitate to get in touch today!