CHIP Reverse Mortgage & Others Explained - The Inside Secrets Revealed

Get All The Facts You Need About Reverse Mortgages In Canada To See If They're Right For You.

Don’t get a CHIP reverse mortgage in Canada until you’ve read this information to learn about all the options.

Discover the most important secrets, the hidden costs & fees exactly how it works, the best alternatives and the main advantages and disadvantages – you won’t find this information anywhere else.

This will give you the real truth.

Written by a Chartered Accountant - Mich Sneddon, CPA, CA - who won several mortgage awards for helping Canadians with reverse mortgages.
Get The Real Reverse Mortgage Facts

Award Winning Information You Can Trust & Value

I’ve won dozens of awards for my mortgage advice – including the prestigious Most Trusted Mortgage Agent in Canada award from the Wealth & Finance Awards.

What Is A Reverse Mortgage?

A reverse mortgage is a unique home loan only available to people in Canada aged 55 years and older. It is called this because – unlike other mortgages – it doesn’t require regular monthly payments.

The key features are:

  • You must be 55 years old to qualify.
  • No monthly mortgage payments are required.
  • The maximum amount you can borrow is 55% (usually 10% to 55%) of the appraised value of your home.
  • Interest is charged but added to the amount owed, instead of being paid.

The home must be your principal residence – or primary residence if you have more than one home.

It is specifically for retirees – or those getting closer to retirement – hence the age restriction.

The reverse mortgage proceeds are received as tax free cash and do not impact Government benefits.

There are currently 3 lenders in Canada – HomeEquity Bank (with their CHIP reverse mortgage product), Equitable Bank and Bloom.

How Does A Reverse Mortgage Work? A Short Video Full Explanation Video With A Real Life Case Study:

If you have 20 to 30 minutes, this video explains reverse mortgages in detail – using a real life case study walking you through the details (using a real life home value and all the associated numbers).

Once you’re done, click below the video to get more information emailed to you.

Download Your Free Reverse Mortgage Guide

“The information in the videos is explained in simple non-techical language. This allowed me to have all my questions about reverse mortages and how to qualify for such a mortgage answered.”

Victoria F, Ontario

5 stars

Reverse Mortgage In Canada vs The USA - Beware

Please note that the above information relates to a reverse mortgage in Canada. For example, the age to qualify for a reverse mortgage in the USA is actually 62. This is why it’s important to do your research, as many people get confused between the Canada and U.S. reverse mortgage – the two products are very different.

If you have been reading any information that references the age as 62, or uses terms such as ‘HUD’, ‘HECM’, ‘FHA’, ‘home equity conversion mortgage’ or ‘churning’ – then you have been reading information that relates to a reverse mortgage in the U.S.A – none of these terms have anything to do with Canada. See my article on Reverse Mortgages In Canada vs the USA for more information.

You can also see about signing a contract like this on the Government of Canada website or check out the information below to learn more about how it works in Canada.

What About An RBC Reverse Mortgage Or Other Lenders In Canada?

At present, the “Big 5” Canadian banks – RBC, BMO, CIBC, Scotiabank and TD do not offer a reverse mortgage loan.

It is only offered by 3 lenders: Home Equity Bank – with their CHIP reverse mortgage – as well as Equitable Bank and the Bloom reverse mortgage.

Manulife and Fraction also have products that can work in a similar way to a reverse mortgage – please contact me if you are interested in learning more about this.

Reverse Mortgage Rates

Firstly, you should know that the interest rate on a reverse mortgage does tend to be a higher than a traditional mortgage or line of credit – but lower than many other options (such as a private or second mortgage).

Like a regular mortgage, you can also get fixed rates and variable rates (or open / adjustable interest rates) with some lenders.

For more on this and the latest reverse mortgage rates in 2023, check out my reverse mortgage interest rates article. I keep the latest rates in there – as well as explaining how the interest rate can affect your equity.

About Me

Mich Sneddon, CPA, CA

I’m a Chartered Accountant (link to my accountancy license) and Mortgage Agent (link to my mortgage license) with Dominion Lending Centres Edge Financial, FSCO License #10710.

I was named one of the top Mortgage Professionals in Canada by Canadian Mortgage Professional magazine and I was nominated for a Canadian Mortgage Award – thanks to all the people I have helped discover if a reverse mortgage is right for them.

Some of the reviews from over 22,350 Canadian homeowners I have helped:

“Mich Sneddon gave us an option and everything worked out well for us. We are so thankful for his input… Definitely someone who cares and does his best to help.”
Wendy M
5 stars

“Much thanks for your informative articles… I appreciate the great articles you have provided.”
Sharon J
5 stars

“Provided very courteous, caring and extremely professional assistance and service…5 stars in every area.”
Paul B
5 stars

About Me

Mich Sneddon, CPA, CA

I’m a Chartered Accountant (link to my accountancy license) and Mortgage Agent (link to my mortgage license) with Dominion Lending Centres Edge Financial, FSCO License #10710.

I was named one of the top Mortgage Professionals in Canada by Canadian Mortgage Professional magazine and I was nominated for a Canadian Mortgage Award – thanks to all the people I have helped discover if a reverse mortgage is right for them.

Some of the reviews from over 22,350 Canadian homeowners I have helped:

Other Frequently Asked Questions (FAQ) From Homeowners Across Canada

Can I Lose My Home Or Can The Lender Take My Home?+-

With a reverse mortgage your home remains yours forever. There are absolutely no exceptions to this. This is the same as with any other mortgage in Canada. In fact, because there are no payments to make, a reverse mortgage is actually safer than a traditional mortgage in this regard (with a traditional mortgage you could lose your home if you don't keep up payments - there are no payments for a reverse mortgage, so this risk is gone). Even if both homeowners were to pass away, the lender still cannot take your home - it would be passed on to your Estate who would then go through the process of settling the reverse mortgage balance with the lender. Again - this is the same as any other mortgage in Canada. For more on this, see my article on what happens at the end of a reverse mortgage.

Can You Get A Reverse Mortgage If You Still Have A Mortgage?+-

You can still take this out if you have an existing mortgage and/or monthly mortgage payments on your property. It would be the exact same process that you'd go through in taking your mortgage to another lender - they will simply replace your existing loan (essentially moving it to another lender). Like moving any mortggae, an appraisal will be ordered to confirm the home value. You'd then get to keep any excess funds & money available (as tax free cash). Check out this article on the top misconceptions for more like this: the top 8 misconceptions about reverse mortgages in Canada. A reverse mortgage allows you to move away from having to pay monthly mortgage payments while still gaining access to the equity in your home (in the form of tax free cash - either as a cash lump sum or monthly payments). If you are considering a reverse mortgage, make sure you take a look at my informational pamphlet.

What Is CHIP Or A CHIP Reverse Mortgage?+-

CHIP stands for the 'Canadian Home Income Plan' (so shortened to CHIP as an acronym) - this refers to the reverse mortgage offered by HomeEquity Bank. It is what this was previously called before it was changed to CHIP reverse mortgage. The name was changed to the 'CHIP reverse mortgage ' to more accurately reflect the type of loan this is (it is a mortgage CHIP, after all, and takes into account your equity, since you are accessing the equity in your home). They also changed their name from HomEquity Bank to HomeEquity Bank. For more on the history of HomeEquity Bank and the reverse mortgage product, the 400 year history of the reverse mortgage. Aside from the CHIP mortgage, there are now 2 other lenders who offer reverse mortgages in Canada - the Bloom reverse mortgage and Equitable Bank reverse mortgage. There may be other lenders considering entering the market as well.

How Much Money Can I Get?+-

There are 4 key factors in deciding how much you qualify for under a reverse mortgage: (1) The appraised value of your home, (2) Your age, (3) Your home's location and (4) The property type. I actually created a whole video where I walk you through this and the calculation that goes into it - reverse mortgages explained. You may qualify for a max amount of 55% of your home's appraised value - but it will usually be in the range of 10% to 55% of your home value. In some instances, lenders will even go higher than 55% and up to 60% of your home value. The remaining equity (and any future house price appreciation) remains yours, of course. And remember the cash flow you do receive is as tax free cash. One thing to note is that the appraised value of your home may be lower than you think your property value is. This is because appraisers tend to be quite conservative and place very little weight to the condition of the home (any upgrades or improvements inside the home). So remember the property value used may be less than you were hoping it to be. I've tried to cover everything on how reverse mortgages work in the my eBook, my articles (including different reverse mortgage lenders), alternatives to long term care (allowing you to live in the home you love with a product that gives you access without having to sell your home) and how it all works with your home value. You can apply online for a reverse mortgage assessment and get a quote (estimate) of how much you qualify for as a homeowner or homeowners here.

How Do I Receive The Money?+-

There is a fair bit of flexibility in how you will receive the reverse mortgage proceeds & cash - but it will always be tax free cash. You can take out a lump sum, get monthly payments or a combination (lump sum plus monthly payments - plus future cash lump sums). The only thing to be aware of is that interest rates work differently for lump sum payments (which can be fixed or variable interest rate) versus monthly payments (which are almost always a variable interest rate).

What Are The Pros And Cons Of A Reverse Mortgage?+-

You'll find all the advantages and disadvantages of a reverse mortgage - updated for 2023 in detail - right here - pros and cons of reverse mortgages. It outlines everything you need to know. Reverse mortgages give homeowners the chance to access the money tied up in your home without the risk of losing your home or having to hire a real estate agent and sell your home. They can be a great way to supplement your retirement savings - or even help the kids or grandkids with a down payment on a new home. But it's important to look at the pros and cons. I believe in this product which allows you to keep your home and improve your finances until the reverse mortgage borrower dies - but want to make sure you have all the facts and answers - things like what happens when the reverse mortgage borrowers pass away, understanding that the reverse mortgage is a loan secured against your home, the comparison to a regular mortgage, and more. Which is why I wrote the article above. Give it a read and let me know of any questions you have!

Got Any Further Questions . About Reverse Mortgages In Canada?

If you have any further questions then please let me know! I hope you found some value from this.

Please make sure to also check out my Reverse Mortgage Pros YouTube channel where you’ll find video tips & information regarding reverse mortgages and other loans in Canada.

You can also receive free information from me about reverse mortgages, including the key facts – click here to sign up for that.

Mich Sneddon CPA, CA

Reverse Mortgage Pros - Helping Canadian Homeowners See If Reverse Mortgages Are Right For Them