Detailed information
About lender
CHIP Reverse mortgage is a lending solution from Home Equity Bank offering online mortgage loans for Canadian homeowners aged 55+.
A reverse mortgage is a loan secured by your home. In a traditional mortgage, you pay a bank, while a reverse mortgage pays you.
CHIP Reverse mortgage allows access to up to 55% of the home’s value in tax-free cash with no monthly repayments.
Canadian Home Income Plan (CHIP) Corporation was established in Vancouver, British Columbia, in 1985 to help Canadians 55+ get the cash they need to live in a comfortable and secure retirement home they love without worries about regular payments.
The company operates in all ten provinces in Canada.
Features
You can borrow up to 55% of your home value. The amount depends on your age, home's value and location, personal debts, and credit score.
You can use a reverse mortgage calculator on the official website to enter these details and determine how much money you could be eligible for.
The borrowing money is tax-free cash. You don't have to make any monthly payments; only keep your taxes and insurance updated.
Loan purposes aren't limited.
With a CHIP Reverse Mortgage, you retain the ownership of your home and maintain the title, even if your income or home value changes.
The interest rates are typically higher than traditional mortgages, and the balance steadily increases.
The early repayment charge may be applied if the loan is repaid within the first five years.
Other CHIP products include Income Advantage (which provides a steady stream of income to boost the current retirement income), CHIP Max (more immediate access for younger clients to a higher percentage of their home equity), and CHIP Open (made for homeowners 55+ searching for a short-term financing solution with the option to repay the total loan amount at any time without prepayment penalties.)
Pros and cons
Look through this pros and cons review to decide whether a CHIP Reverse mortgage is your solution.
Pros
A lump sum or regular advances payouts
Access to 55% of home value
Loans for any purpose
No monthly payments
Funds are tax-free
You stay in your home
A stable long-term bank program
Operating all over Canada
Get acquainted with the drawbacks you should know before borrowing.
Cons
A lot of fees are charged
The minimum property value is $200,000
Your primary residence only
Available only for homeowners 55+
High-interest rates
CHIP Reverse Mortgage is a good solution for borrowers who want to boost their retirement income, pay health expenses, pay off debts or make home renovation while staying in the home.CHIP Reverse Mortgage has advantages and disadvantages, but borrow responsibly: calculate all charges and rates.
Loan conditions
The annual interest rates depend on the term: 6,40% — 7,67%. Variable and fixed terms are available. The HomeEquity Bank prime rate determines variable, and fixed are available for six months, 1, 3, 5 year periods.
There are no monthly payments. You can repay at any time — paying off the amount borrowed plus the accrued interest. However, if you move out or sell your home, you must repay your reverse mortgage.
There is an appraisal fee, an administrative fee, closing fees, and fees for independent legal advice depending on the mortgage type.
The closing and administrative fees cover the cost of discharging any prior mortgage and registering the CHIP Reverse Mortgage. Usually, it is added to the mortgage balance rather than paid out directly. It is about $1,795 to $1,995.
Methods of loan funding
You can receive all of the money at the time of closing, in one lump sum. Or take some of the money at the time of closing and set aside the rest to request whenever you want.
Another option may be monthly deposits delivered directly to your bank account.
