Canadian Reverse Mortgage Key Features
A reverse mortgage is a way for older homeowners to access the money tied up in their homes without having to worry about repaying the loan or interest until they sell or move. In Canada, the CHIP Reverse Mortgage offered by HomEquity Bank is a popular option. Here are some key features to know:
- You can receive up to 55% of your home’s value, but the actual amount depends on factors like your age, your spouse’s age, the location and type of home you own. Typically, those over 75 years old can access the full 55%.
- To qualify for a reverse mortgage, both you and your spouse (or anyone else on the home’s title) must be 55 or older. Any existing mortgage on the house must be paid off using the reverse mortgage funds.
- You can choose to receive the mortgage as a lump sum or in regular monthly installments, deposited into your bank account.
- The funds you receive are completely tax-free. They don’t count as taxable income and won’t affect any benefits or government funds you receive.
- One of the main benefits is that no payments are required while you and your spouse live in your home. You can stay in your home for life without worrying about repayment. The balance is only payable if you sell and move or pass away, in which case your estate may pay it back by selling the house or obtaining another mortgage.
- You maintain full ownership of your home as long as you keep up with property taxes, fire insurance, and any applicable fees.
- You keep any remaining equity in your home after the reverse mortgage is paid off. HomeEquity Bank has found that 99 out of 100 people have money left over. The balance you owe can never exceed the fair market value of your home, providing a level of protection for your estate.
Other important features to consider include the interest rates, which are currently low but may increase over time, and the possibility of using the reverse mortgage to help your children buy a home.