House Rich but Cash Poor? Perhaps you wish to look at a CHIP.

by Steve Clark on February 27, 2012

Imagine receiving a big sum of immediately. Where would you put it? That may be a question a record number of Canadian home owners over the age of 55, are asking themselves. Folks, like you, who have worked all their lives to repay the mortgage, but in doing so delayed or evaded saving for retirement, leaving them with little in reserve for their “Golden Years”.

These Canadians have looked to reverse home-loans, called a “CHIP”, to tap available money for retirement, investments, vacations or anything more they can imagine. Why not? It’s their money. In the 4th quarter of 2011, a record $67.2 million was doled out to happy seniors, (an increase of 42% over the same time in 2010). That is tons of loot!

What precisely is a “CHIP”?

A “CHIP” (Home Income Plan), is a reverse mortgage secured by the equity in your house. HomEquity Bank is the sole provider of reverse home loans. It’s an simple way to access cash that’s currently “lodged” in your home and unaccessable. The benefits and features of a reverse mortgage make it well worth the time to analyze. Call your home loan agent or broker for info and help in the procedure.

Here are the facts:

– So long as both spouses are 55 or older and own and live in their home, they qualify.
– The cash can be used for whatever you select, there are no limits or limitations.
– You’ll borrow up to 50% of the value of your home. There is a standard formula used to figure out exactly how much you can get based totally on a variety of factors. These contributors include your ages, location of the home, kind of home (apartment, townhome, freehold, etc), and it’s appraised value.
– You may select not to make payments so long as you and/or your other half live in your house.
– With a reverse homeloan you can receive either a lump sum or monthly payments.
– The money is tax free, and won’t affect stuff like OAS or GIS payments or pensions.
– You still own your home.The leftover 50% equity is untouched and you are in total control. You’re still answerable for upkeep, taxes, insurance, etc, as usual.
– Your estate is sure to be protected, The plan ensures that the amount to be repaid will never exceed the fair market valuation of your home.
– There are set up charges, which are added to your home loan so you do not have to dish out of your pocket. These charges include;

– Rating Costs
– Counsel/Legal
– Administration

– Interest rates are posted up at 4.75% for an adjustable rate mortgage, rates are going to change according to the market. If fixed rates are preferred or different terms desired, discuss these with your mortgage agent.

Rebalancing a $400,000 Estate

If it Sounds to Good to be True…

– All of this sounds great, but before you start packing you want to fully understand the terms and responsibilities of a reverse home loan. Your mortgage agent will be in a position to provide you with the facts and your barrister will advise you on the legal aspects. It is advisable that you do your due groundwork. It is all totally legit and legal but knowing is key, right?

– There may also be a requirement to explain the program to successors as they may fail to understand what you are doing. Your mortgage brokercan and will help you explain the conditions avoiding uncomfortable feelings in the family.

– Remember dodgy investments or get wealthy fast schemes should not be part of your plans and can spell disaster. Always take the conservative route and find help from professionals, that’s what they are there for.

Yup, appears like they have thought of everything and they have. A CHIP is nothing new and the program has been refined and proven time and time again. This is a great opportunity to live the remainder of your life the way you always needed to, nicely. Call me today at 705.730.2400, to talk about your dreams for all that money. It’s OK to start packing now.

Steve Clark is 1 with Northwood Mortgages. He keeps his clients contemporary with the latest mortgage reports by posting on his site

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