What is a reverse mortgage (CHIP)?
A reverse mortgage is a loan secured against the value of your home. It is designed exclusively for homeowners aged 55 years and older. It enables you to convert up to 55% of your home's value into tax-free cash. The funds from a reverse mortgage can be used for whatever reason you desire; to cover monthly expenses, renovate your home, pay off debt, or travel. Growing in popularity, many reverse mortgagors are using the proceeds to gifting their loved ones with an early inheritance so they can witness first-hand the impact of those inheritances!
With a reverse mortgage, you maintain ownership of your home and there are no monthly mortgage payments to make. Repayment of the loan is only required if you subsequently choose to move or sell. A reverse mortgage guarantees the amount you eventually repay will never exceed the fair market value of your home. And if your home rises in value, the appreciation is all yours to keep. You are simply required to maintain your property and pay the property taxes and home insurance.
Reverse mortgages are sometimes referred to as CHIP. This refers to a reverse mortgage once called The Canadian Home Income Plan provided by HomeEquity Bank.