The truth about the CHIP Reverse Mortgage

This article was produced in partnership with HomeEquity Bank

For more than three decades, Canadian homeowners 55+ have turned to HomeEquity Bank for assistance with staying in their homes. The CHIP Reverse Mortgage has enabled tens of thousands of people across the country to access up to 55% of the value of their home, not just boosting their finances but providing them with freedom and flexibility as they enter their Golden Years. But despite this proven track record, misconceptions around how a reverse mortgage actually works persist.

Two of the most common myths are that people will end up owing more than the property is worth and/or lose ownership of their home, but neither of those are true. In fact, HomeEquity Bank has four key safeguards in place to ensure your client’s equity is kept safe and secure:

1. Your client always retains title and ownership of their home. While your client’s home is used to secure the loan – and just like a regular mortgage with a bank, HomeEquity Bank is registered charge on the title – your client does not transfer home ownership to the bank and your client remains on the title as the homeowner.
    
2. Lending amounts are conservative. HomeEquity Bank lends up to 55% of the value of the home, while factoring in the homeowner’s age, property type and property location. The older the client, the higher the loan amount they can qualify for. This is done so that the reverse mortgage doesn’t exceed the value of the home.
    
3. Homes typically appreciate in value. The total value of the home is likely to appreciate over time – especially if it is located in a major city. Meanwhile, only the interest on the borrowed amount accrues. Based on that differential, even a modest home appreciation allows for equity preservation with the CHIP Reverse Mortgage in place. This is why over 99% of homeowners have money left over when their loan is repaid.
    
4. No Negative Equity Guarantee. Many people think that if their home has depreciated in value at the time it is sold, they/their heirs will end up owing more than the house is worth. However, HomeEquity Bank’s No Negative Equity Guarantee [1], ensures that as long as the client meets their mortgage obligations and property taxes are paid, the amount that the client will have to pay on their due date will not exceed the fair market value of their home. If the home depreciates in value and the mortgage amount due is more than the gross proceeds from the sale of the property, HomeEquity Bank covers the difference between the sale price and the loan amount.

The bottom line is Canadians are living longer than ever before, and traditional retirement planning is no longer meeting the needs and lifestyle of those 55+. Brokers need to be aware that a reverse mortgage is an effective retirement tool for qualifying homeowners. The funds aren’t only for paying down debt, which is another common misconception. Many clients use the money they receive to supplement retirement income, buy a second property, do major renovations, finally take those dream vacations or simply stay in the home they love.

The number of savvy brokers growing their portfolios by catering to the evolving needs of their 55+ clients is also growing. Demand for reverse mortgage products recently hit an eight-year high and as the leading provider of reverse mortgages in the country, HomeEquity Bank is a fantastic – and safe – option.

Don’t hesitate to educate yourself and your clients about the benefits of the CHIP Reverse Mortgage. To find out more, contact a HomeEquity Bank BDM today.

HomeEquity Bank has been dedicated to providing Canadian homeowners 55+ with smart and simple solutions for enjoying the retirement they deserve - in the home they love, for over 35 years. It understands helping your clients is your top priority, and HomeEquity Bank is here to help make that happen with a range of products including CHIP Reverse Mortgage, CHIP Max, CHIP Open and Income Advantage.

[1] The guarantee excludes administrative expenses and interest that has accumulated after the due date.