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ABCs of Canadian Home Income Plan (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 Home Income Plan could be just what you need. It’s the simple and sensible way to unlock the value in your home and turn it into cash to help you enjoy life on your terms.
A CHIP Home Income Plan is a reverse mortgage secured by the equity in your home. Unlike a traditional mortgage in which you make regular payments to someone else, a reverse mortgage pays you.
The big advantage with CHIP is that you do not have to make any payments – principal or interest – for as long as you or your spouse live in your home. That’s what has made reverse mortgages such a popular solution in Canada, the U.K., the U.S., Australia and other countries.
A CHIP Home Income Plan is designed exclusively for homeowners age 60 and older. This age qualification applies to both you and your spouse.
You can receive up to 40% of the value of your home. The specific amount is based on your age and that of your spouse, the location and type of home you have, and your home’s current appraised value. We offer a no obligation quote on how much money may be available in your home.
You can choose how you want to receive the money. CHIP gives you the option of receiving all the money you’re eligible for in one lump sum advance, or you can take some now and more later, or you can receive planned advances over a set period of time. You can even combine a lump sum advance at the beginning with ongoing advances over time.You receive the money tax-free. It is not added to your taxable income so it doesn’t affect Old Age Security (OAS) or Guaranteed Income Supplement (GIS) government benefits you may receive.
You can use the money any way you wish. Maybe you want to build up your savings or cover unexpected expenses. Perhaps you want to update your home or help your family without depleting your current savings. The only condition is that any outstanding loans secured by your home must be retired with the proceeds from your CHIP Home Income Plan.
No payments are required while you or your spouse live in your home. The full amount only becomes due when your home is sold, or if you move out.
You maintain ownership and control of your home. You will never be asked to move or sell to repay your CHIP Home Income Plan. 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 the equity remaining in your home. In our many years of experience, 99 out of a 100 homeowners have money left over when their CHIP Home Income Plan is repaid. And on average, the amount left over is 50% of the value of the home when it is sold.
Your estate is well protected. We guarantee that the amount to be repaid will never exceed the fair market value of your home at the time it is sold. If your heirs want to keep your home, they can repay the CHIP Home Income Plan from other funds.
You can save on taxes. If you decide to use the money you receive to buy non-registered investments such as GICs and mutual funds, you may be able to deduct the CHIP Home Income Plan interest charges from the income those investments earn. Be sure to consult a financial or tax advisor.
Posted Rates: Our interest rates start at just 3.75%
We have a variable rate option with no fixed term or if you prefer a fixed rate, we can offer you six-month, one-year, three-year, or five-year terms. Your interest rate will be based on the length of term you choose.
* APR is based on a CHIP Home Income Plan of $150,000.The annual percentage rate (APR), is calculated as the rate of interest of the plan plus closing costs.
You can lower your borrowing costs with an interest rate discount.
Interest payment discount – if you choose to pay your full annual interest, you will receive a 0.50% discount for the following year. You can pay in a single lump sum or make regular payments.
- No principal or interest payments are required for as long as you or your spouse live in your home.
- You can choose to pay all or part of the annual accrued interest ($1,000 minimum/year) without signing up for the interest payment discount plan. You can pay once every calendar year when it’s convenient for you. If you pay the full year’s accrued interest, you will qualify for a 0.50% discount on your next discount review date.
- The full amount only becomes due when you and your spouse pass away, when the home is sold, or if you both move out.
- You have the option to repay the principal and interest in full at any time. When you repay, an interest rate differential may apply. If you repay within the first three years, a prepayment amount will apply. These may be waived or reduced in the event of death or a move to a long-term care facility or retirement residence.
- Typically from $175 to $400 as an out-of-pocket cost.
- Actual amount varies by province and for urban and rural properties.
- Request for an independent appraisal is ordered through CHIP.
- Typically $300 to $600 as an out-of-pocket cost.
- Price range assumes no title issues.
- At your request, CHIP can provide a list of legal advisors in your area.
- It is recommended that you discuss fees with the legal advisor before proceeding.
- Costs are $1,495 for all of our interest rate options.
- These costs will be deducted from your CHIP Home Income Plan funds so they are not an out-of-pocket expense.
- Includes title search, title insurance and registration.