August 22, 2019

Reverse Mortgage Myths Revealed

What benefits do I get from a Reverse Mortgage?

It may not be a good financial condition to have all of your home’s equity locked up,  especially if you are using your income to pay debt or do not have enough income or savings for your retirement. It is important that after retirement you should be able to meet your daily expenses, get yourself or your spouse plan for a vacation, buy a car, renovate your home, or make some investment. A reverse mortgage provides you the absolute financial freedom to enjoy your retirement time without any monthly repayment on the mortgage.

How do I utilize the funds I receive through a Reverse Mortgage?

Many of our  clients have made remarkable improvements in their lifestyle after retirement by using their home equity to:

  • Consolidate all existing debt against other conventional mortgages, credit cards or credit lines.
  • Supplement your income for financial freedom
  • Fund higher education of your children and grandchildren
  • Provide financial help to your family members for purchasing a new property.
  • Improve your home and lifestyle through renovation
  • Go for a vacation to your dream place for enjoying you post-retirement time
  • Buy your own new property or invest in something valuable for you

How much funds can I receive from a Reverse Mortgage?

The loan amount from a reverse mortgage usually depends on your age and the fair market value of your home.  To get an estimate on how much you would quality for, kindly fill out the form available at: online estimate request.

Do I retain the ownership of my home after getting a reverse mortgage ?

Yes! According to the policies of CHIP reverse mortgage, you always retain complete ownership of your home. A reverse mortgage just provides you  funds by unlocking you equity and does not take away your ownership. It’s your home and you may continue to enjoy it anyway you wish. You also have the flexibility to make all or part of the interest payments anytime you wish.

Why does a reverse mortgage plan have a lightly higher rate of interest compared with the conventional mortgage plan?

Unlike in a conventional mortgage plan, with a reverse mortgage, you are not required to pay the interest for as ling as you live in your home. With a conventional mortgage, the bank requires you to make payments every month and they then have the opportunity to reinvest that money to make more money.  With a reverse mortgage, the bank may not receive payment for many years (until you decide to sell the home).

When it comes time to sell the home and pay off the loan, what will be left for me or my estate?

Based on our experience in the past 26 years, home in Canada have continued to appreciate in value at a conservative rate of approximately 6% (as reported by CMHC Corporation).  At this rate, the cost of borrowing accumulated over the years is more than offset by the homes growing equity and most of the homes equity is preserved for you or your estate after it is sold.Please contact us and we will provide you with a financial illustration projection of the money you are left with when you finally sell your home.

What is the impact in case the price of my home in Canada plunges?

Your property is always safe-guarded even though there is a decrease in the home price. CHIP reverse mortgage provides you with a guarantee that if your homes value becomes lower than the mortgage amount, CHIP will assume that loss and you or your estate will never owe more than the home is worth.

When do I have to pay back the reverse mortgage?

The reverse mortgage is only due to be paid back:

  • When you sell your home.
  • In the event of the passing of the final owner of the home.

I own a cottage. Am I eligible to get a reverse mortgage against the cottage?

Yes, definitely! However, approval of a reverse mortgage on your cottage would depend on its location.

What are the fees to set up a CHIP reverse mortgage?

There are three fees involved with a reverse mortgage:

  • The appraisal cost that falls between $200 and $400 depending on the location of your home.
  • Legal fees for your lawyer’s Independent Legal Advice where you will sign all mortgage documents. The fee for the legal advice is usually between $300 and $500.
  • CHIP fee and Closing set up the account and pay for the CHIP legals, registration of the mortgage and you title insurance. This is fee is $1495.

These fees need not be paid out of pocket and rather can be paid using the  amounts from your mortgage loan amount. All of these are one-time payments and therefore does not require you to pay any other ongoing, renewal or other fees till the time you have your reverse mortgage running.

If I plan to move to another home can the CHIP be transferred to the new home?

With the CHIP reverse mortgage program, you have all freedom to sell your home or move when you want. If you plan to move and would like to use the CHIP reverse mortgage to purchase the new home,  we can help you with transitioning your mortgage to your new home. Contact us for more information about this plan.