10 Feb CHIP Reverse Mortgage by HomeEquity Bank – More uses than you might think
Have you ever heard the words “Reverse Mortgage”, and wondered why on earth someone would need or want one?
After all, aren’t they just a last resort option for people on the brink of losing their home? The short answer is, “No”.
Reverse mortgages are for those age 55+ ONLY. While ½ of this demographic in Canada have plenty of income, investments, and real estate, the other 50% are finding that the bulk of their savings is stored up in this asset called their home. With cost of living climbing and people living longer, government pensions just aren’t keeping up. The real estate market continues to climb long term, building up even more wealth in the home. So, how do you get at that money?
If you’re like 91% of older Canadians, and you prefer to stay in your home for now, selling isn’t option #1. Getting a traditional mortgage or line of credit can work, but they are hard to qualify for if you have a limited fixed income, plus they require a regular monthly payment.
CHIP at a Glance:
- NO PAYMENTS REQUIRED – The interest charged is simply added to the outstanding balance. HomeEquity Bank is eventually paid back when you move or sell.
- Up To 55% of Your Appraised Home Value – Many clients qualify for more money with a CHIP than a regular mortgage since approvals are based mostly on age and property.
- Advanceable Funds – You are given a credit limit, but can access funds more slowly over time, only being charged interest on the funds you’ve advanced.
- TAX Free Money – Accessing equity won’t affect your annual income, keeping your taxes low.
- Home Appreciation – Over the past 34 years, typical clients find that average home appreciation over time offsets the accruing interest on the CHIP, leaving plenty of equity in the end
Common Reasons for a CHIP:
Pay off Debt – Perhaps you can’t retire debt free, but what if you could retire “payment” free? Many clients turn to a reverse mortgage to pay off their traditional mortgage and other debts, eliminating those monthly payments from their budget.
In-Home Care – Aging in place is important to many, but how do you afford to make alterations to the home and/or pay for some level of assistance for the yard or personal health care? You paid for your home, now it’s time for your home to help pay for YOU.
Giving While Living – If you are going to leave your home to your children one day down the road, perhaps you’d like a way to provide a bit of that inheritance TODAY, instead. CHIP is a great way to early inherit money, help your family purchase a home or get them through the loss of a job or a divorce, and experience that joy of helping. With no monthly payments to make, and no taxes, it can be a smart way to transfer your wealth in stages.
For more information about CHIP Reverse Mortgages, contact Chris Hoeppner today.
Guest authored by Chris Hoeppner of HomeEquity Bank, together with Rebecca Awram of Seniors’ Lending Centre