In an effort to draw awareness to the growing need for reverse mortgages in Canada, HomeEquity Bank is releasing a series of articles about reverse mortgages in Canada to elaborate on how the product can benefit Canadian Seniors and clear up some common misconceptions. Here, to kick off this series of articles is our feature article on what is a CHIP Reverse Mortgage and what are the benefits?
Unlike our American neighbours, when Canadians explore the option of a reverse mortgage, there is only one provider, HomeEquity Bank. In America, there are many companies who offer a reverse mortgage and as a consumer, on top of familiarizing yourself with the concept, you also have to research the best interest rates, read the fine print and compare them to a reverse mortgage provider that best caters to your situation.
In Canada, it is much easier since, HomeEquity Bank, is the only provider of Reverse Mortgages. However, Canadians are encouraged to familiarize themselves with the concept of a reverse mortgage and understand how the product works in order to determine if it is the best option for their financial situation. One way to do this is to get a free estimate of how much money you can get with a CHIP Reverse Mortgage. This estimate is based on your profile and home condition. You can also find out some of the frequently asked questions about reverse mortgages in Canada.
To get you started in your understanding of a Reverse Mortgage in Canada, below is some basic information about the CHIP Reverse Mortgage.
What is CHIP?
CHIP is the name of HomeEquity Banks’ reverse mortgage product. It is a loan secured against the value of your home. It allows you to unlock up to 55% of the value of your home without having to sell or move. The money you receive is tax-free and you can use it towards any of your personal needs such as:
- Pay off debts/Consolidate debt
- Home renovations and repairs
- Unexpected expenses (medical, emergency)
- Financially aid your children/grandchildren
- Improve or maintain your standard of living
- Pay for a vacation or a special purchase
Who is eligible for CHIP in Canada?
- Canadian Homeowner (own your home)
- Your home is your primary residence
- Age 55 or older
Why CHIP (benefits)?
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No Health Checks
There are loans that require a health check to ensure that the recipient(s) (of the loan) are in good health to pay off the loan. With a reverse mortgage, since there are no regular monthly payments required until the homeowner(s) move, sell or pass away, health checks are not a requirement.
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Keep Your Home And Maintain Ownership Of Your Property
Many people often ask whether the property title of the home gets transferred to the bank once the reverse mortgage is approved. The bank simply loans you a percentage of the value of your home in tax-free cash, but the title and ownership of the property remains yours. However, this means you must continue to pay your property taxes and maintain your home so that it remains in good condition.
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No Regular Monthly Payments Required
The biggest advantage and feature of a reverse mortgage in Canada, is that you don’t have to make any regular monthly payments until you move, sell your home or pass away. Unlike a regular mortgage, where you have to maintain your monthly payments, a reverse mortgage lets you use the money as you please and gives you freedom from payments for as long as you live in the home. Once the homeowners move, sell the home or pass away however, the reverse mortgage including interest and principal is paid off from the home’s sale proceeds.
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The Money Borrowed Is Tax-Free And Does Not Affect Your OAS Or GIS
Since the income you receive from a reverse mortgage is tax-free, it does not have any impact on your Old-Age Security (OAS), Guaranteed Income Supplement (GIS) or income from your Registered Retirement Savings Plan (RRSP) that you may be receiving.
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Choose How You Plan To Spend The Money
One of the greatest benefits of a reverse mortgage is that you are in complete control of the loan and you are free to spend it on whatever needs you require it for.
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You Will Never Owe More Than The Value Of Your Home
With a reverse mortgage you will be guaranteed that when you or your estate has to repay the loan, it will never exceed the fair market value of your home at the time it is sold. But keep in mind that your property must be kept in good maintenance and your property taxes and insurance have to be up to date and not in default.
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Relieve Financial Stress
A reverse mortgage loan can help you consolidate your debt and clear your monthly payments so that you can live the rest of your life financially stress free!
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Enjoy Retirement
A reverse mortgage loan will help you clear your financial burdens and allow you to enjoy your retirement. You worked hard your entire life, now is the time to enjoy the fruits of your labour.
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Take Control
A reverse mortgage loan is essentially the money from your home equity. So take control of what you own and make it work toward your needs now!
Reverse mortgages are definitely not for everyone, but they are a great option for many Canadian seniors who are looking for that extra financial security.
To find out more about a CHIP reverse mortgage in Canada, Contact HomeEquity Bank at 1-866-522-2447 or talk to your financial advisor to see if a Canadian reverse mortgage is a good option for your financial needs.
