Free Reverse Mortgage Guide
Everything you need to know about a CHIP reverse mortgage in Canada.
Written by a independent mortgage broker and Chartered Accountant.
Learn all the facts that you must know about this mortgage -
you won't find the information contained in this free guide anywhere else.
What Is A Reverse Mortgage? Check Out Our Video...
In just 2 minutes, our video will explain the basics to you - you can then download our free guide - once you're done - to get a full perspective.
A Reverse Mortgage Is A Confusing Product
- Let Us Help
There is so much bad, incomplete and terrible information out there about reverse mortgages in Canada - that's why we created this free guidebook.
The Top 3 Things You Will Learn:
1. All the pros and cons of a reverse mortgage - including any reverse mortgage pitfalls.
2. How a CHIP Reverse Mortgage compares to a Home Equity Line Of Credit (HELOC) loan and other mortgages.
3. All the facts that you must be aware of before making your decision.
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- Mike, BC
Click on the question to reveal the answer.
A reverse mortgage is a specialist mortgage loan only available to people in Canada over the age of 55. It is called a reverse mortgage because - unlike other mortgages - it doesn't require regular monthly payments.
It is specifically for seniors - or those getting closer to retirement - to help supplement retirement funds. This is why it is only available to those older than 55.
The purpose is to allow you to withdraw equity - based on the value of your home - without having to make any repayments towards any kind of mortgage or other loan. The lender makes their money through charging interest on the balance withdrawn - but instead of the interest being paid each month (like a traditional mortgage or Home Equity Line Of Credit), it simply accrues against the balance owed. That is, it is added to the balance owed.
The amount that can be taken out is no more than 55% of the value of the home. However, this amount is tiered - so at 55 years of age you would not qualify for the full 55% but rather a smaller percentage. This is so you don't eat up your home equity during your retirement and don't lose all your home value.
There is one central goal to this product: to allow you to stay in your home for life.
Upon all homeowners passing away, the lender will then recover the value owed - including both the equity amount and interest - through your Estate. This will be either by the house being sold or re-mortgaged.
You can also see the definition on the Government of Canada website.
No, this guidebook is for the Canadian product - currently offered by CHIP HomEquity Bank. In the U.S.A there are a lot more reverse mortgage problems because they are a completely different product in the U.S. compared to Canada. I would say that they are considered much more risky and less beneficial for you than the Canadian reverse mortgage.
This is actually what leads to a lot of confusion about the reverse mortgage in Canada - people read stories from the U.S.A. and think that they could happen here. Like normal mortgages, reverse mortgages are much more highly regulated in Canada, so all the problems in the U.S. don't happen here.
This is why the free information pack only covers the Canadian CHIP reverse mortgage.
Yes, reverse mortgages are available all across Canada - with the exception of the Yukon. For more see our Reverse Mortgage Canada page. You can rest assured that we have all the information you need covered in our free information pack.
CHIP stands for the Canadian Home Income Plan - which was previously what this product was called. The name was changed to reverse mortgage to more accurately reflect the type of loan this is (it is a mortgage, after all). The goal remains the same, however, to help provide seniors with additional income in or entering your retirement years, by leveraging the value of your home.
Rates change over time - like any mortgage loan. However, with the reverse mortgage in particular you must think about more than just the rates. For example, one thing that you absolutely must consider is home equity growth - this is what can help you keep (or even increase) your home equity over time - despite having a reverse mortgage on your property. Yes, you read that right - many people are increasing their home equity despite having a reverse mortgage, because the value of their home increasing.
A reverse mortgage is really and ultimately a question of home equity growth rates (growth of the value of your home) vs reverse mortgage interest rates. That is, your home equity growth can often offset the interest completely.
For more on this and where the current rates lie, check out our free reverse mortgage rates and penalties article.
There are 3 key factors in deciding how much you qualify for under a reverse mortgage: (1) Your property value, (2) Your age and (3) The property type. You may qualify for as much as 55% - that is the maximum available for any borrower of reverse mortgages in Canada.
Unlike other bank products, your credit level or credit score are not a factor in the decision. This is because reverse mortgages are more focussed on your property value and the amount your home is worth, rather than credit.
We are working on this but a reverse mortgage calculator - and amortization schedule - are not something that should impact this decision. We cover this in great detail in our free reverse mortgage eBook that you can get on this page.
If you have done any research about this mortgage product, you will have noticed that there are not many unbiased, impartial and objective guides for a savvy senior out there. Something that shows you the reverse mortgage pitfalls as well as the upside.
That's why we created this guidebook with the real pros and cons of a reverse mortgage in Canada.
In addition to this, there is also a lot of confusion and misinformation surrounding reverse mortgages. For example, many people out there are confused about whether or not they could potentially lose their home.
(Let me set this one straight off the bat - I can tell you right now that the answer is no - never under any circumstances will you or any Canadian lose your home because of a reverse mortgage. But the mere fact that people are confused by this and asking these questions is a testament to how poor the information out there is.)
So I created and wrote this free guide so that you can educate yourself and decide if this is the right financial solution for you during your retirement years.
We have been working on this for months - putting together the information and updating it as we are asked more questions and get more feedback about this mortgage loan. We have also used our contacts with lenders and experience as mortgage agents to ensure that all the information contained inside is accurate. I genuinely believe that there is no other guide to this product as comprehensive as this.
The guide is fresh – we update it regularly – and our goal has been to include absolutely everything there is to know about reverse mortgages in Canada.
If you feel like we have missed something, then let us know - we are always writing new articles and sending out new information on a regular basis.
If you already know quite a bit and are pretty sure that this might be a good option for you, we have you covered too.
We offer a free reverse mortgage assessment where a dedicated mortgage professional and Chartered Accountant will look at your details and advise you if this is the right loan for you. As the name suggests, it only takes 90 seconds of your time.
I am a licensed mortgage agent with Dominion Lending Centres Edge Financial – FSCO License #10710. I am also a certified Chartered Accountant.
Our mortgage brokerage is independently owned and operated – this means that you get independent, objective and professional advice on all of your mortgage and other financial needs. We don’t work for any bank or lender – you are our client. I personally created this website - Reverse Mortgage Pros - so that it could a hub and provide all the information and advice that anyone would ever need regarding reverse mortgages.
We are also affiliated with Dominion Lending Centres – the number one company in Canada for any kind of mortgage.
Just so you have it in black and white: our guide, our 90 second assessment and all the advice and recommendations we provide you are completely, totally, 100% free - you will never pay us a penny ever for any of our advice.
If you are interested in the costs and fees for the product itself, check out our article on reverse mortgage costs and fees.
The guide is a PDF file (opens with Adobe or any PDF or eBook reader). I will email it to you immediately. I will also continue to send you other free tips, tricks and advice to help you along the way – you can unsubscribe any time if the guide is more than enough for your needs.
If you would like something sent in the post, we can arrange that too. Just hit the 'contact' button at the top of this screen to get in touch with us.
This guide outlines some of the reverse mortgage pitfalls - as well as some of the disadvantages of a reverse mortgage. Of course this product isn't the right fit for everyone - but as independent and licensed mortgage agents, we can help you to decide if it is the right fit for you. That is what this free guidebook is intended to do.
The Big 5 banks - RBC, BMO, CIBC, Scotiabank and TD do not offer this product in Canada. The reason is that reverse mortgages are a very specialist product that requires years of investing and input before the bank may see any returns.
At present, it is only offered by HomeEquity Bank - who are a regulated and chartered bank.
Whilst this is much easier to get than any other kind of mortgage, since we are still talking about lending large amounts of money, this does not make it a walk in the park. HomEquity Bank are a Schedule A bank - so they do require some paperwork. It will not be as intense as a traditional mortgage and your credit score and income are almost not a factor at all - but they do need to gather basic information before they will lend the money. For example, even though they do not rely on it as such, they will still pull your credit score - as they are required as a Schedule A lender to show some form of due diligence. For more on this, please get in touch with us.
If you have any further questions then please let me know! I hope you found some value from this.
- Michael (Mich) Sneddon CPA, CA