What is a Reverse Mortgage?
A reverse mortgage is a loan secured against the appraised value of your home. It is designed exclusively for Canadian homeowners aged 55 years and older. It enables you to convert up to 55% of your home’s value into tax-free cash, while staying in your home. You don’t have to make any regular mortgage payments or pay back the loan until you move or sell.
Since the CHIP Reverse Mortgage is designed exclusively for Canadians over 55, it’s easier to qualify for than other lending options – you need to be a Canadian homeowner 55+ and the property is your primary residence. The amount you qualify for will depend on factors such as your age, the appraised value of your home, its location, and the type of home.
How Do Reverse Mortgages Work in Canada?
A reverse mortgage is a secure solution for Canadian homeowners age 55+ to access their home equity and turn it into tax-free cash, without having to pay any regular monthly mortgage payments. This allows you to access tax-free cash without having to move, sell or downsize.
With a CHIP Reverse Mortgage from HomeEquity Bank you always retain the ownership of your home and maintain title. You will never be forced to move or sell your home, even if your income or home value changes.
We guarantee the amount that you or your estate eventually has to repay will never exceed the fair market value of your home at the time it is sold. Your home should never be a burden to you or your family. If your home goes up in value, the appreciation is all yours. You just need to maintain your property and pay the taxes and insurance.
Sometimes you need a little extra cash.
A limited income during retirement combined with rising costs of living means many Canadians may have trouble maintaining their lifestyle – but there are always financial options available to help.
The money can be used however you choose.
The funds from a reverse mortgage can help:
- Supplement your lifestyle
- Increase monthly cashflow
- Consolidate debt
- Buy another property
- Cover medical expenses
- Renovate your home
- Take that much-needed vacation
You only repay when you move or sell your home.
Best of all, a reverse mortgage loan doesn’t need to be repaid as long as you live in the home. If the property is sold, all remaining equity after repayment of the loan is left to the homeowners or their estate.
You may be able to access up to 55% of the appraised value of your home’s equity.
A Reverse Mortgage is a financial solution that enables Canadian homeowners age 55+ to access part of their home’s equity while retaining full ownership and title.
You have financial flexibility.
How you receive your funds it completely up to you – whether you’d like to have the full amount all at once as a lump sum or spread out into regular monthly deposits.
What you see is what you get.
The money received from a Reverse Mortgage is tax-free and requires no monthly mortgage payments.
Reverse Mortgage Lending Options
With HomeEquity Bank, you have the flexibility to access the cash from your home in the way that suits you. Whether you need a steady stream of income or a lump sum amount, we offer four different products to help you achieve your financial goals. You can speak to a one of our Mortgage Specialists, who will be happy to explain more about our products and help you choose the one that’s right for you.
Are there any additional costs associated with a Reverse Mortgage?
The costs will vary depending on the type of reverse mortgage you take. The costs with getting a reverse mortgage include closing fees, fees for independent legal advice and the cost for a home appraisal.
How A CHIP Reverse Mortgage Works to Turn Your Home’s Equity Into Tax-Free Cash
There’s no retirement like staying in the home you love. If you’re like most Canadian homeowners age 55+, much of what you own fits into one of two categories – the equity in your home and the money you have saved. Chances are that the value of your home has grown over the years and makes up a good portion of your net worth. While having a home that has appreciated in value is a positive, you typically can’t spend that value unless you sell your home. A Reverse Mortgage allows you to turn up to 55% of the appraised value of your home equity into tax-free cash. It also ensures you have access to the funds whenever you want it. You’ll maintain full ownership and control of your home without the obligation to make regular mortgage payments until you move or sell.
How Much Cash Can I Qualify for with a Reverse Mortgage?
With a CHIP Reverse Mortgage you can access up to 55% of the appraised value of your home in tax-free cash. The amount of cash that you qualify for will depend on various factors including the value of your home, type of home (condo, townhome, semi-detached, detached, etc.), location of your home and your age.
To find out how much tax-free cash you can qualify for from a CHIP Reverse Mortgage, try our reverse mortgage calculator.
What Reverse Mortgages Can Be Used For
Unlike many conventional loans, which have to be for a specific purpose (such as a car loan) the funds you receive from a reverse mortgage can be used for absolutely anything. Here are some of the most popular ways Canadians use the money from a reverse mortgage:
- Stay in your home and avoid having to move, sell or downsize
- Boost retirement income and cash flow
- Help relatives financially (for example, to buy a home or pay for a wedding)
- Renovate your home (often to make much-needed improvements or help with mobility issues)
- Pay off high interest debts
- Travel more often
- Buy a second property
- Cover health expenses, including in-home care
- Finance the kind of retirement you’ve always dreamed of
Benefits of a Reverse Mortgage
There are several key advantages to taking out a reverse mortgage, especially when compared to a conventional mortgage or loan. With a CHIP Reverse Mortgage, you get to stay in the home you love and keep full ownership and title, without having to move, sell or downsize. You can have more financial freedom without having to dip into your retirement savings and this allows you to leverage what is probably one of your largest assets and turn up to 55% of the appraised value of your home into tax-free cash. No monthly mortgage payments are required, and you can spend the money however you choose. You can receive the cash in a lump sum amount or in regular monthly payments. As the value of your home increases over the years, you may be able to access additional equity. Once the loan is repaid, almost all of HomeEquity Bank customers – or their heirs – have money left over.
Considerations of a Reverse Mortgage
There are a few aspects of a Reverse Mortgage that you should be aware of.
The interest rates are typically higher than traditional mortgages or HELOCs, and as with any loan the balance increases over time. If the loan is repaid within the first five years, there may be early repayment charges. And finally, you are borrowing against the value of your home and may not be able to borrow more money this way in the future.
FAQs on How a Reverse Mortgage Works in Canada
How Do I Qualify for A Reverse Mortgage?
To be considered eligible for a reverse mortgage in Canada, and to determine the amount of a reverse mortgage that you qualify for will depend on the following factors:
- A Canadian homeowner
- Aged 55 or older (if you have a spouse, both of you must be at least 55 years old to be eligible)
- Location of your home
- Type of home (for example, detached, condo, townhouse, etc.)
- Appraised value of your home (minimum appraised value of $250,000)
- The condition of your home
- The amount of home equity
How Do I Apply for A CHIP Reverse Mortgage in Canada with HomeEquity Bank?
The process is simple and convenient! All we need from you is some basic information:
- How much your home is approximately worth
- What type of home you live in
- Your address
- Your age and gender
To start the process to apply for a reverse mortgage, complete our free estimate form online, fill in the fields below or simply give us a call at
1-866-758-2447 to speak with one of our reverse mortgage specialists.
How Will I Receive the Money for My Reverse Mortgage?
Once you’ve qualified for your reverse mortgage amount, you have a number of choices of how to receive the money. It can either be in the form of a lump sum, or you can receive it in regular monthly payments starting at $1,000, or quarterly payments starting at $3,000. Find out more about the IncomeAdvantage.
Am I Able to Get a Reverse Mortgage with a Low Credit Score?
Yes, The CHIP Reverse Mortgage is designed specifically to assist Canadian homeowners 55+ and improve their financial situation. While your credit score is a consideration, we take a holistic view of your financial history. The loan amount you’re approved for is also based on factors like your age, the appraised value of your home, its location, and your personal debts.
When and How Do I Repay a Reverse Mortgage?
A major benefit of the CHIP Reverse Mortgage is that you don’t have to make any regular mortgage payments or pay back the loan until you move or sell your home. You can repay your reverse mortgage at any time by paying off the amount borrowed plus any accrued interest. If you pay off your mortgage before the term is up, you may have to pay a prepayment charge. If you move out or sell your home, you have to repay your reverse mortgage. Most of our customers use the proceeds from the sale of their home to pay off their reverse mortgage.
What Are the Interest Rates on a Reverse Mortgage?
Our interest rates vary depending on the term of your reverse mortgage and will be fully explained by one of our Mortgage Specialists during the approval process. We will always strive to be transparent and will not surprise you with any hidden fees. To get an overview of the rates we offer, you can refer to our Reverse Mortgage Rates page.
What happens if I Want to Get Out of My Reverse Mortgage Early?
One of the advantages of the CHIP Reverse Mortgage is that there are no monthly mortgage payments required, however, you always have the option of making a prepayment if you prefer. If you decide to pay back your loan earlier than the terms agreed upon, you can speak with our Client Relations team to find out how much the prepayment penalty would be.
Why Choose HomeEquity Bank for A Reverse Mortgage?
As a federally regulated Schedule 1 bank, HomeEquity Bank meets the highest safety and security standards. For over 30 years, we’ve helped Canadian homeowners aged 55+ live their retirement in the comfort of their own home. That’s why it’s no surprise that HomeEquity Bank is Canada’s leading provider of reverse mortgages.
To find out how much how much tax-free cash you qualify for, call us at 1-866-758-2447 to speak with a reverse mortgage specialist.
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