Reverrse Mortgages
Understanding the CHIP Home Income Plan
For seniors and borrowers aged 55 and above, the CHIP Home Income Plan offers an excellent financing solution, providing tax-free cash with competitive rates and no monthly payments. With this plan, you can leverage your home equity without the burden of immediate repayment or the need to sell your property.
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Benefits of the CHIP Program:
The CHIP Program is tailored for Canadian homeowners aged 55 and older who want to enjoy retirement on their terms. By accessing up to 55% of your home's value without selling it, you can enhance your monthly cash flow while retaining ownership and control of your beloved home. The borrowed money is tax-free and doesn't impact government benefits like Old-Age Security or Guaranteed Income Supplement. Plus, you only need to maintain your home and stay current on property taxes and insurance.
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How to Utilize the CHIP Program:
You can receive funds from the reverse mortgage as a lump sum or in planned advances, depending on your preference. These funds can be used for various purposes, including home improvements, covering regular expenses, travel, healthcare expenses, debt repayment, or providing an early inheritance to your children.
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Qualifying for the CHIP Program:
To be eligible, you must be a Canadian homeowner aged 55 or older, and your home must be your primary residence. If you have a spouse, both of you must be at least 55 years old and listed on the CHIP Reverse Mortgage application.
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Repayment of the CHIP Program:
Repayment is not required until you decide to move or sell your home. You're responsible for property taxes and homeowners insurance, but the loan is repaid from the proceeds of the home sale. After repayment, any remaining equity belongs to you and your estate.
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Pros and Cons of the CHIP Program:
Pros include tax-free cash, retaining ownership of your home, no monthly mortgage payments, and a non-recourse loan structure. However, interest rates tend to be higher, and the loan balance increases over time along with accrued interest.
Before proceeding with a reverse mortgage, it's essential to consider all factors and consult with family and friends. With CHIP, you can enjoy financial flexibility while continuing to live in the home you love.