The CHIP Program: A Canadian Solution for Homeowners

For reverse mortgage counseling, please give us a call at 1-866-758-2447 and we can walk you through any of your questions or concerns. Our reverse mortgage professionals are available weekdays from 8:30 AM to 5:00 PM (EST) to answer any questions you may have. 

For detailed information about CHIP Reverse Mortgages, download our FREE information guide. 

There are several factors to consider before deciding to proceed with a reverse mortgage. As with any big decision, it’s helpful to speak to family and friends and fully understand the pros and cons of the reverse mortgage in Canada. Some of the pros and cons include: 

Pros: 

• You receive the reverse mortgage funds as tax-free cash that does not impact your Old-Age Security (OAS) or Canada Pension Plan (CPP) payments, and you can spend the money any way you like! 
• You stay in the home you love and maintain ownership and control of your home. All you must do is maintain your property and pay your property taxes and homeowner’s insurance. 
• There are no monthly mortgage payments required until you decide to move or sell your home. 
• The CHIP Program is a non-recourse loan which means that, at the time of repayment, you (or your estate) will never owe more than the fair market value of your home – our No Negative Equity Guarantee – as long as you have maintained your property taxes and insurance.
• It is your choice how you receive the funds from the CHIP Plan. You can receive it all at once in a lump sum or in scheduled advances over time – it’s up to you! 

Cons: 

• Because there are no monthly mortgage payments required, interest rates for the CHIP Plan tend to be higher than that of a traditional mortgage option. 
• The balance of the loan increases over time as does the interest on the loan. 

To be considered eligible for a reverse mortgage in Canada, and to determine the amount of a reverse mortgage that you qualify for will depend on the following factors:

• A Canadian homeowner
• Aged 55 or older (if you have a spouse, both of you must be at least 55 years old to be eligible)
• Location of your home
• Type of home (for example, detached, condo, townhouse, etc.)
• Appraised value of your home (minimum appraised value of $250,000)
• The condition of your home
• The amount of home equity

CHIP Reverse Mortgage interest rates are available in both fixed and variable terms. The variable rate will fluctuate as it is directly influenced by the Bank of Canada’s prime rate. If the Bank of Canada’s prime rate increases, for example, your Reverse Mortgage interest rate will also increase. Our fixed rates are set for a pre-determined timeframe and are available for a six-month, 1-year, 3-year or 5-year period. 

The closing fee charged by HomeEquity Bank for most clients is $1,795, although individual circumstances do vary. The closing fee is deducted from the proceeds of the mortgage, instead of being paid out of pocket. The closing fee covers legal, administrative costs, discharging any prior mortgage and registration of the CHIP Reverse Mortgage. 

Learn More about CHIP’s fixed and variable Reverse Mortgage Interest Rates. 

Yes, The CHIP Reverse Mortgage is designed specifically to assist Canadian homeowners 55+ and improve their financial situation. While your credit score is a consideration, we take a holistic view of your financial history. The loan amount you’re approved for is also based on factors like your age, the appraised value of your home, its location, and your personal debts.

Multiple factors such as age, location, and the appraised value of the home affect the maximum amount of the CHIP Reverse Mortgage. After all factors are considered, the maximum amount you may qualify for is up to 55% of the value of the home. 

You are not required to make any payments on a CHIP Plan until you choose to move or sell your home. You are, however, required to ensure that your property taxes and homeowners’ insurance are kept up to date. When you do decide to move or sell, the loan is repaid from the proceeds of the sale of the home. After the loan is repaid, all remaining money belongs to you and your estate. On average, CHIP customers have over 50% of the value of their home left to enjoy after repaying the loan. The exact amount will depend upon several factors, including: the value of your home, the amount of your loan, and the amount of time that has passed since you took out the loan.

No, a reverse mortgage is considered tax-free income, thus Medicare or pension benefits will not be affected.

For more information, and to see what your Reverse Mortgage can be worth, try our Reverse Mortgage Calculator.

For more questions, please see our complete list of Frequently Asked Questions or call 1-866-758-2447 to get your questions answered by a reverse mortgage professional.