Main Street Mortgages is an authorized provider of the CHIP Home Income Plan, which is a reverse mortgage that allows you to receive payments based on the equity in your home. Unlike a conventional mortgage where you make regular payments to a lender, with a CHIP Home Income Plan, the lender pays you.
What makes CHIP a popular solution in Canada, the U.K., the U.S., Australia, and other countries is that you don’t have to make any payments towards the principal or interest for as long as you or your spouse reside in your home.
This program is designed exclusively for new homeowners aged 55 and older, including your spouse. Depending on your age and your spouse’s age, your home’s location, type, and appraised value, you can receive up to 50% of your home’s value.
You can choose how to receive the funds, including a lump sum advance, planned advances over time, or a combination of both. Additionally, you have complete ownership and control of your home and are not required to move or sell your home to repay your CHIP Home Income Plan. As long as you keep your property maintained and pay your property taxes, fire insurance, and condo or maintenance fees, you can remain in your home.
You keep all the remaining equity in your home, and when your CHIP Home Income Plan is repaid, 99 out of 100 homeowners have money left over. The amount remaining on average is 50% of the home’s value when it is sold.
Your estate is protected because the amount to be repaid never exceeds the fair market value of your home at the time it is sold. If your heirs want to keep your home, they can pay off the CHIP Home Income Plan from other funds.
You can save on taxes by using the money to purchase non-registered investments, such as GICs and mutual funds, and deducting the CHIP Home Income Plan’s interest charges from the income earned by those investments. It’s advisable to consult a financial or tax advisor.
CHIP offers a variable rate option without a fixed term, or you can choose from six-month, one-year, three-year, or five-year fixed-rate terms. The interest rate is based on the term you select. You can also qualify for an interest rate discount, including a 0.50% discount for the following year if you choose to pay your full annual interest.
The money you receive is tax-free and can be used for any purpose, as long as any outstanding loans secured by your home are paid off with the proceeds from your CHIP Home Income Plan. No payments are necessary while you or your spouse reside in your home, and the full amount only becomes due when you move out or sell your home.
The cost for an independent appraisal, which is arranged through CHIP, usually ranges from $___ to $___, depending on the province and the type of property (urban or rural). Independent legal advice is mandatory, with typical fees ranging from $___ to $___. These costs can be paid using the money received from the CHIP Home Income Plan. However, it is advisable to discuss fees with the legal advisor beforehand, and CHIP can provide a list of legal advisors in your area upon request. If you choose the 5-year option, there will be no legal or administrative fees. It is important to note that the aforementioned price range assumes that there are no title issues.