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With a number of Richmond Rotarians at or reaching retirement age, is was important to learn about retirement planning and innovative financing tools. Victor Chang taught us about Canadian Home Income Plan (CHIP) Reverse Mortgages - a financial tool for Canadians over 55 years old offered by select financial institutions in Canada. A reverse mortgage is essentially loan against the value of your home. If eligible for the program, the homeowner accesses their home equity (up to 55% of the value of the home) and turns it into tax-free cash, without having to pay any regular monthly mortgage payments. You only repay the loan when you sell the home or move. (You can always repay early though). Because you don’t have to make any regular mortgage payments or pay back the loan until you move or sell, it allows you to access tax-free cash without having to move, sell or downsize. However, there are interest rates associated with the loan, and it is important to compare your rates before entering into a reverse mortgage. The maximum amount you’re able to borrow will depends on: - your age
- your home’s appraised value
- your lender
Two financial institutions offer reverse mortgages in Canada. HomeEquity Bank offers the Canadian Home Income Plan ( CHIP), which is available across Canada. You can get a reverse mortgage directly from HomeEquity Bank or through mortgage brokers. Equitable Bank offers a reverse mortgage in some major urban centres. |
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