July 17, 2018

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 Costs.to 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.

Unlock the value of your biggest asset – Your HOME – with a CHIP Reverse Mortgage

With CHIP Home Income Plan, you can, as senior homeowners unlock up to 40% of the equity in your home with no payments required until you choose to move or sell.

For many seniors, CHIP is a sound financial solution that can help them achieve their financial goals.

How a CHIP Reverse Mortgage benefits you:

  • Access a tax-free source of money
  • Create additional cash flow
  • Increase investment portfolio
  • Use the interest expense to offset tax on investment income
  • Rebalance assets by turning a portion of home equity into savings

Supplement your income with a CHIP Reverse Mortgage

Are you among those unfortunate Canadians who could not save the necessary cash for their retirement? If yes, you can preferable opt for the Canadian Home Income Plan (CHIP) to supplement some good income for your retirement.

According to the Statistics Canada, 77% of the net value of home equity owned by seniors or homeowners is never invested and remains tied up Therefore, if you do not have enough fund available for your post-retirement expenses, CHIP can help you to utilize some part of the home equity to access income that is absolutely tax-free.

The fund you receive through CHIP does not levy any tax on you because you will be using your equity of your home for which you have already paid the required tax from the cash you used to purchase it. Additionally, the income you receive through CHIP is not an earned income and therefore is never considered taxable in any of the tax calculations in the following years. It also does not restrict you from receiving your other retirement benefits from either Old Age Security (OAS) or Canadian Pension Plan (CPP).

There are a few ways you can choose for gaining your retirement income through CHIP. You can opt for receiving payments periodically from CHIP for a specific period of time as agreed up on by you and CHIP. Alternatively, you can also choose to receive the entire amount against your home equity as a lump sum. In the later method, you can invest that lump sum amount or save it in your account and withdraw as and when you need. However, it is advisable to consult a financial advisor to understand which option is suitable for you.

CHIP offers you best solution in situations when you have less saving for your retirement and want to supplement the some good amount of cash for your retirement. For more information, please Contact Us or you can also Request a Quote Online.

Thank goodness we found out about CHIP Reverse Mortgages

“Thank goodness we found out about CHIP. Now we don’t have to worry amount making monthly payments anymore and we can stay in our family home for as long as we want.” Monica L. – Toronto