Should Vancouver Seniors Consider CHIP?

January 3, 2013

CHIP Home Income Plan reversed mortgageCHIP Home Income Plan is a Canadian reverse mortgage offered by HomeEquity Bank of Canada. It is popular income plan for senior who can tap the equity in their homes without having to worry about making any interest or principal payments. The mortgage only comes due when the borrower dies, sells their house or move out permanently.

With a reverse mortgage, home owners can borrow up to 50 per cent of the appraised value of their home. They repay the principal – and interest that has been accumulating – when they sell it.

As more boomers hit retirement age, reverse mortgages are growing in popularity. Reverse mortgages may be a good fit for some seniors, the products may not be suitable for everyone. Although the are other options for seniors, reverse mortgage is appealing to many seniors and it has many advantages to the borrowers. It is important to know how reverse mortgages work, how much they cost and the pitfalls to avoid.

Misconception on loss of equity 

There are 2 important numbers that will determine what happen to your home equity after 10 or 15 years. The interest rate of your reverse mortgage and the rate of appreciation of your home. When CHIP Home Income Plan was able to receive funding through HomeEquity Bank, the lower cost of funding effectively reduced what used to be 7.5% or more interest rate to just under 6% for 5-year fixed rate mortgage.

Home appreciation is equally important in affecting the final outcome of the mortgage when it is paid out. If 50% or $300,000 is taken out from a clear-titled $600,000 home, the equity remaining in the house is $300,000. Assuming at 3.00% appreciation annually (assuming property value barely keep pace with inflation of 3.1%), the equity value of a $600,000 home after 15 years is just under $935,000.

A borrower taking out $300,000 reverse mortgage would have the money for their use. The money would improve the borrower’s lifestyle, and if part of the money is invested wisely, it would have generated extra income for the borrower.

Net equity value at the time of paying out the mortgage 

If a variable rate mortgage of 5.00% is used (Annual Percentage Rate (APR) is 6.02%), at the end of 15 years, the $300,000 loan will have outstanding loan plus interest around 550,000. The difference between the property value and the loan and interest owing is $385,000.

If you like to discuss your situation, or like to find out if reverse mortgage is for you, kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Vancouver Seniors: CHIP Home Income Plan – Reverse Mortgage

January 3, 2013

CHIP Home Income Plan reversed mortgageThere are many articles on the trend for senior tapping into their home equity for extract money locked inside their home. In Vancouver and the suburbs around the City, CHIP Home Income Plan may be consider a suitable avenue for seniors to free up money from equity they have on their homes. HIGHLIGHTS of the CHIP Home Income Plan – Reverse Mortgage

  • A CHIP Home Income Plan is a reverse mortgage secured by the equity in your home. A reverse mortgage pays, and you can decide how much and how often you want to receive the money. The big advantage with CHIP is that you do not have to make any payments of principal or interest for as long as you or your spouse live in your home.
  • In Canada, A CHIP Home Income Plan is designed exclusively for homeowners age 55 and older. This age qualification applies to both you and your spouse.
  • You can receive up to 50% of the value of your home. An appraisal is required to determine your home value.
  • You can choose how you want to receive the money. You have the option of receiving all the money you’re eligible in one lump sum advance, or you can take some now and more later. Or, you can choose to receive planned advances over a set period of time. You can combine a lump sum advance at the beginning with ongoing advances over time.
  • You can use the money any way you wish. The full amount of the loan and interest is paid or becomes due when your home is sold, or if you move out. You will never be asked to move or sell to repay your CHIP Home Income Plan.
  • You maintain ownership and control of your home. You are required to maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.
  • You keep all the equity remaining in your home. In an inflationary environment, your home value increases over time. In majority of the cases, homeowners have money left over when their CHIP Home Income Plan is repaid.
  • Your estate is well protected. If your heirs want to keep your home, they can repay the CHIP Home Income Plan from other funds.

If you would like to know more about the CHIP Home Income Plan – Reverse Mortgage, give me (Elsie Tse) a call at 604-716-3369 or Email Me 

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Is Home Income Reverse Mortgage For You?

January 2, 2013

Home equity loan reversed mortgage for seniors

Home Income Plan – A Reverse Mortgage

h the Canadian Home Income Reverse Mortgage, money in your home becomes available for you to do things you really want to do. CHIP Home Income Plan is Canadian “reverse mortgage” secured by the equity in your home. You do NOT require to make any payments on your reverse mortgage  – no principal or interest payment for as long as you, or your spouse, reside in your home.

The money is tax-free and it will NOT be added to your taxable income. It will not affect your Old Age Security (OAS) or the Guaranteed Income Supplement (GIS) benefits.

Reverse mortgages have become the simple and practical choice for many seniors across Canada, United States, United Kingdom and Australia. CHIP us subject to age qualification and has a limit to the loan you can get.

Reverse Mortgage up to 50 per cent of the Value of Your Home

The loan you are eligible to receive from your reverse mortgage is based on:

  1. The age of you and your spouse
  2. The type of home you own
  3. The location of your home
  4. The current value of your home

You are free to choose

You can decide how you wish to receive your funds.

  1. Receive one lump sum payment
  2. Spread out your payments – one for now and another at a later date
  3. Get a lump sum now with ongoing payments to you over time
  4. Receive planned payments over a period of time

A CHIP Home Income Plan in Canada has a variable rate option with no fixed term or, if you can choose to have a fixed rate of six-month, one-year, three-year, or five-year terms. Your interest rate will be based on the length of term you choose.

You Decide Your Payment Options

  1. No principal or interest payments are required for as long as you or your spouse lives in your home.
  2. Pay all or part of the annual accrued interest ($1,000 minimum/year) without signing up for the interest payment discount plan.
  3. You can pay once every calendar year when it’s convenient for you
  4. You will qualify for a 0.50% discount on your next discount review date if you pay the full year’s accrued interest.
  5. The loan owing becomes due when you and your spouse pass away, when the home is sold, or if you both relocate.
  6. You have the option to repay the principal and interest in full at any time, an interest rate differential may apply.  Within the first three years, a prepayment amount will apply if you repay your loan. These may be waived or reduced in the event of death, a move to a long-term care facility or retirement residence.

Set-up Costs

Appraisal Fee

  1. Typically from $175 to $400, amount varies by province and properties.
  2. Independent appraisal is ordered through the providers of the home income plan.

Independent legal advice is required

  1. Typically cost for legal advice – $300 to $600
  2. Price range assumes no title issues.
  3. You discuss fees with the legal advisor before proceeding.

Costs – legal, closing & administrative

  1. Costs are $1,495 for various interest rate options.
  2. These costs will be deducted from your home income reverse mortgage funds.
  3. These costs include title search, title insurance and registration.
  4. They are not an out-of-pocket expense.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Reversed Mortgage Increased 42% in the 4th Quearter, 2011.

January 2, 2013

The desire by seniors to age in place is driving the demand for reversed mortgage

Home equity loan reversed mortgage for seniorsThe need for an improved cash flow in retirement is leading to record number of reverse mortgages in Canada, according to a HomEquity Bank study.

Reverse mortgage origination was up 42% in the fourth quarter of 2011. On an annual basis, the company originated $239 million in reverse mortgages, a 16% year over year jump.

Over the next 20 to 25 years, the Canadians population over 55 years will reach 10 million. Retirement tools such as reverse mortgage are going to get more popular. Read more