Unlock equity: Your home is your piggy bank

Wouldn’t it be nice if you had the money to do more of the things you want to do? A CHIP Reverse Mortgage could be just what you need. It’s a way to unlock the value in your home and turn it into cash.

There are several benefi ts to a CHIP Reverse Mortgage. You receive the money tax-free. It is not added to your taxable income so it doesn’t affect Old Age Security (OAS) or Guaranteed Income Supplement (GIS) government benefi ts you may receive. And it may be a better alternative to cashing in other assets that could end up incurring additional personal tax bills for you.

You can use the money any way you wish. Maybe you want to enjoy your retirement or cover unexpected expenses. Perhaps you want to update your home or help your family without depleting your current savings. The only condition is that any outstanding loans (e.g. existing mortgage or home equity line of credit) secured by your home must be paid out with the proceeds from your CHIP Reverse Mortgage.

No regular mortgage payments are required while you or your spouse live in your home. The full amount only becomes due when you and your spouse no longer live in the home.

You maintain ownership and control of your home. You will never be asked to move or sell to repay your CHIP Reverse Mortgage. All that’s required is that you maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.

You keep the equity remaining in your home. In many years of experience, 99 out of a 100 homeowners have money left over when their CHIP Reverse Mortgage is repaid. And on average, the amount left over is 50 per cent of the value of the home when it is sold.

A CHIP Reverse Mortgage is secured by the equity in your home. Unlike a traditional mortgage in which you make regular payments to someone else, a reverse mortgage pays you.

The big advantage with the CHIP Reverse Mortgage is that you do not have to make any regular mortgage payments for as long as you or your spouse lives in your home. That’s what has made reverse mortgages such a popular solution.

Who is it for?

The CHIP Reverse Mortgage is designed exclusively for home-owners age 55 and older. This age qualifi cation applies to both you and your spouse/common law partner.

You can receive up to 55 per cent of the value of your home. The amount is based on your age and that of your spouse, the location and type of home you have, and your home’s current appraised value.

You can choose how you want to receive the money. The CHIP Reverse Mortgage gives you the option of receiving all the money you’re eligible for in one lump sum advance, or you can take some now and more later, or you can receive planned advances over a set period of time.

Many clients use a reverse mortgage to pay off their existing mortgage and debts. Many fi nancial professionals recommend a reverse mortgage to supplement monthly income instead of selling and downsizing, cashing in other taxable assets, or taking out a conventional mortgage or a line of credit.

There are one-time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as administration fee, title insurance, and registration. With the exception of the appraisal fee, these fees can be paid for with the funding dollars.

Article provided by Glynis Van Steen, mortgage broker, Centum Total Mortgage Services Inc., Oakville. glynis_vansteen@centum.ca