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CHIP Reverse Mortgage
If you’re like most people, you often find yourself wishing you had the freedom to do more – to live your life on your terms. One of the simplest ways to achieve this is by unlocking the value of your home through a CHIP Reverse Mortgage. This type of mortgage provides tax-free cash to homeowners over the age of 55 – and the best part is that you don’t have to pay it back as long as you live in the home.
What Is a CHIP Reverse Mortgage?
A CHIP Reverse Mortgage is a mortgage in which the homeowner receives tax-free money based on the equity in their home, without having to make regular mortgage payments. The money only becomes repayable when you and your spouse (if applicable) no longer live in your home or it is sold. It has become a very popular method for homeowners in the U.S., Canada, Australia, and the U.K to free up equity and provide tax-free cash to enjoy their retirement.
Who is Eligible for a CHIP Reverse Mortgage?
CHIP Reverse Mortgages are designed for homeowners in BC aged 55 or older. Both spouses must be over the age of 55 in order to qualify. In addition your home must have an appraised minimum value of $150,000.
Benefits of a CHIP Reverse Mortgage
There are many benefits of a CHIP Reverse Mortgage for homeowners to consider:
- Money is tax-free, meaning it will not be added to your taxable income and therefore will not affect the amount of any Guaranteed Income Supplement (GIS) or Old Age Security (OAS) government benefits you receive.
- The money is yours to spend as you wish – to cover unexpected expenses that arise, updating your home or adding that long-awaited hot tub, helping your family out without dipping into your savings, traveling to those destinations you’ve been dreaming about, or buying an RV to see more of Canada.
- As long as you and your spouse live in the home you are not required to make mortgage payments. The amount of the reverse mortgage only becomes due if you sell your home.
- You maintain full control and ownership of your home and will not be asked to repay your CHIP Reverse Mortgage, or to move, as long as you live in your home.
- Once the CHIP Reverse Mortgage is eventually repaid, 99% of homeowners on average still end up with 50% of the value of their home.
Conditions of a CHIP Reverse Mortgage
When you apply for a CHIP Reverse Mortgage in Canada there are conditions that will need to be met. Once approved you must pay out any loans, mortgages, or home equity lines of credit secured by your home with the proceeds of the reverse mortgage. You must also ensure that you remain up-to-date on your property taxes, maintenance fees, condominium fees, and fire insurance.
Frequently Asked Questions
How does a reverse mortgage work?
A CHIP Reverse Mortgage pays you – the homeowner, based on and secured by the equity in your home. You do not make payments, unlike a traditional mortgage. As long as you or your spouse lives in the home the reverse mortgage does not require payments.
Will I end up owing more than my house is worth?
In most cases the homeowner will have money left over once the reverse mortgage is repaid. When a homeowner takes out a CHIP Reverse Mortgage they keep all of the equity remaining in their home. A reverse mortgage initially cannot exceed 55% of the value of your home.
Factors that affect how much money remains when the reverse mortgage is eventually repaid include how much was borrowed, the home’s value, and how long the reverse mortgage has been in place. More than 99% of homeowners have money left over when the reverse mortgage is repaid.
How much will I be eligible for and how is this calculated?
Factors that determine how much you are eligible for through a reverse mortgage include:
- Both your age and your spouse’s age.
- Your home’s current appraised value.
- Location of your home.
- Type of home.
Once approved you are eligible for up to 55% of your home’s current value. Contact me for a quick estimate to give you an idea of how much you may be eligible for.
What if I owe money on my house when I receive the funds from the reverse mortgage?
It is common for homeowners to use money from their reverse mortgage to pay off debts and any existing mortgage.
Will the bank own my home once I take out a reverse mortgage?
The bank will not own your home. The homeowner retains the title and ownership, but they must ensure that they live in the home and maintain the property, as well as stay up-to-date on property taxes, and insurance.
How will I receive the reverse mortgage money?
This is entirely up to you. Some homeowners prefer a lump sum while others take out what they need at the time and reserve the ability to take more out later. It is also possible to receive set amounts at specified times through the Income Advantage product.
What are the CHIP reverse mortgage fees?
When a homeowner applies for a reverse mortgage they will encounter fees similar to when applying for a mortgage. The administration, title insurance, registration, and legal fees are paid for by the reverse mortgage funds but the homeowner generally pays for the appraisal fees up front.
Should reverse mortgages be considered a last resort when funds are needed?
Reverse mortgages are not a last resort – they are a way to free up some of the equity you have built up in your home. It is an ideal way to supplement income without having to sell the family home or downsize. You are using the equity in your home instead of taking out a line of credit or a traditional mortgage. This is your money.
Will I lose my home if I can’t make payments?
A CHIP reverse mortgage requires ZERO payments as long as you live in your home. You are simply freeing up your own equity – not borrowing more money.
Feel free to contact me with any questions about CHIP Reverse Mortgages or to obtain a quick estimate of how much you are eligible to receive!