The CHIP (Canadian Home Income Plan) allows seniors to conveniently secure a loan against their home equity. Besides, a CHIP reverse mortgage in Canada is a valuable tool for retirees to increase their retirement income. You can get it without selling your home or moving away from it. Moreover, homeowners do not need to make monthly mortgage payments with a CHIP reverse mortgage.
Furthermore, seniors who are over 55 years old can access 55% of their property value with a CHIP reverse mortgage. In addition, the money that borrowers receive is also tax-free with no restrictions on usage. If you are seeking a more relaxed and luxurious retirement in Canada, the CHIP reverse mortgage may suit your needs perfectly. Besides, seniors have good reasons to opt for this option in retirement, which we shall share with you next.
Why Should Seniors Opt for CHIP Reverse Mortgage?
Here are good reasons for seniors to opt for a CHIP reverse mortgage:
- Let Seniors Access up to 55% of Tax-Free Equity
If people withdraw their investments early, it can lead to huge tax penalties. By the same token, many Canadians do not withdraw. Moreover, retirement is extending at the time when company pensions are not sufficient. It is where seniors may consider their option for a CHIP reverse mortgage.
CHIP reverse mortgage allows seniors to access 55% of their property value tax-free. Not to mention, Canadian retirees do not also need to make monthly mortgage payments with this type of loan. Hence, a CHIP reverse mortgage is a good option for seniors to consider and avail in retirement.
- Canadian Retirees Have Full Control of the Ownership
Taking out a CHIP reverse mortgage does not require seniors to evacuate their homes any day of the year. It also means there is not any immediate selling or shifting when seniors opt for this option. Put differently, you retain the ownership of your home with a CHIP reverse mortgage in Canada as long as you desire.
Furthermore, paying the loan becomes mandatory only when you move out, sell your home or die. In such scenarios, the money received from the proceeds of your home is adjusted as your mortgage repayment. Moreover, the extra money goes into your wallet. Still, you need to make sure your property is in optimal condition. Plus, you must pay your property taxes and insurance premiums on time.
In addition, the heirs are responsible for repaying the mortgage if the borrower passes away. Not to mention, the period of time for heirs for loan repayment will differ based on their situations.
- Seniors Get the Freedom to Receive the Loan
When you decide to take out a reverse mortgage as a senior, you get the freedom to receive the amount. For instance, you can opt for a periodic payment system or a lump sum amount. Or you can choose to receive payment in both of the aforementioned ways. Furthermore, you also get the freedom to how you may use your reverse mortgage loan. You may use the amount to pay off your expenses, debts, etc.
Besides, borrowers use reverse mortgage loans for house maintenance, trips, and starting business projects, too. Thus, everything is under your control when it comes to using your reverse mortgage loan.
- The Loan You Get Is Non-Recourse
Many Canadians have a misconception about a CHIP reverse mortgage. They mistakenly think that this loan value can exceed the initial value of the property. However, the fact is that a CHIP reverse mortgage is a non-recourse loan. It means neither you nor your heirs will pay more than the appraised value of the home at mortgage maturity.
These are certainly good reasons for seniors to opt for a CHIP reverse mortgage. Still, there are a few things Canadian retirees should consider while taking it out. We have mentioned them below:
- You are charged a higher interest rate, which can, at times, increase your debt.
- Further, you need to bear extra setup costs, which are deducted from the loan amount you get. Application fees and legal costs, to name a few.
Requirements to Qualify for a CHIP Reverse Mortgage
In general, you qualify for a CHIP reverse mortgage based on the following factors:
- Age – Over 55 years is mandatory
- Home Ownership – You must own the home
- Home Location – to Determine the Value of the Property
- The Amount of Loan Secured
- Interest Rates – Based on the Current Market Value and Risks Involved
CHIP reverse mortgage in Canada allows seniors to secure a loan against the value of their property (homes). Besides, seniors have good reasons to get this loan, which we have recapitulated below:
- It allows seniors to access up to 55% of tax-free equity.
- Canadian retirees have full control of the ownership.
- Seniors get the freedom to receive the loan.
- The loan you get is non-recourse.
Lastly, consulting with a mortgage professional can help seniors make informed decisions regarding a CHIP reverse mortgage.
Company name: Retire Better
Address: 34 Village Centre Pl #300, Mississauga, ON L4Z 1V9
Retire Better is a company with a team of licensed mortgage professionals who have successfully completed thousands of mortgage transactions since 2016 to date. With its knowledgeable mortgage professionals, it helps Canadians get different types of loans, such as reverse mortgages, conventional loans, and more.