Canadian Home Income Plan - CHIP

So, what is CHIP, why CHIP, and why now?

What is CHIP?

• The Canadian Home Income Plan (CHIP) is a reverse mortgage giving seniors access to as much as 40% of their equity, with NO PAYMENTS for as long as they live in the home.  Instead of paying monthly, the interest is simply added to the mortgage balance that becomes due when the home is sold.
• CHIP is designed for clients that are 55 or older, lack cash flow, and don’t want to move. 

Why CHIP?

• There is no credit check, and no debt servicing.  The approval is simply based on the client’s age and the property. 
• There are many reasons to take a CHIP mortgage: 

-A traditional mortgage requires a monthly payment that many simply can’t afford, so they can’t access their equity without selling the home they love.  Even an LOC will eventually run    out of the ability to pay itself, still leaving the client with a payment they truly can’t afford.

-One spouse has passed away, leaving the survivor with the same monthly debts, but half the monthly income.  CHIP can give the cash flow needed to keep on going.

-The money can be used for anything: Investing to increase cash flow, paying out of foreclosure, paying property taxes, debt consolidation, early inheritance so they can enjoy giving the money without the worry of paying for it, higher quality of life, etc.

• With a 15 year average home appreciation of 6% in Canada, and the reverse mortgage typically going no higher than 40% LTV, history has shown that equity erosion is really not something to be worried about.

Why now?

• CHIP received bank status in Oct 2009, lowering cost of funds, and allowing the product to be offered at a much more reasonable interest rate.  CHIP offers, variable, 6 month, 1, 3 & 5 year terms.  Call or email for details.

• The baby boomers are reaching retirement years, and many have arrived with more debt and less income than they had planned for. 
• 84% of seniors want to stay in their home, but with limited cash flow, monthly debts, and a dwindling retirement fund, many are forced to sell the home they love and downsize to live.
• Ever tightening mortgage qualification rules are making it harder for people to access their equity, so no credit checks and no debt servicing makes this an appealing product.