June 25, 2019

Bank Line of Credit

The Alternative to CHIP Canada Reverse Mortgage

A conventional bank Line of Credit maybe an alternative to a CHIP Mortgage and does not have an age restriction. This product is for clients that have higher monthly income and might need more than 50% of the home value. A bank line of credit or traditional Canadian mortgage could provide you with up to 60% of the appraised value of your home.

Quick Facts:

PROS: More money may be available. No age restrictions to qualify. The interest rate might be slightly lower. You only have to make monthly interest payments and never have to repay the principal unless you sell. You are able to withdraw and deposit money as needed, and have direct access via a chequing account or bank card.

CONS: To qualify you must have good credit, and the required monthly household income. Even though there could be more available to borrow, your approval amount will be restricted based on your income level.  In many cases for seniors, the approval amount ends up being lower than a CHIP amount. The bank can Re-Call the mortgage and require you to pay it off at any time, if you miss payments or your household income where to decrease.