Under 55? Reverse Mortgage Alternative For Anyone Over 18

There is only ONE provider of true reverse mortgages in Canada, the ‘CHIP’ Canadian Home Income Plan by HomEquity Bank. Some people are uncomfortable with the rate and terms, or do not meet the minimum age requirements for a CHIP reverse mortgage.

There is a lender in Canada that offers something similar to the CHIP reverse mortgage.... a mortgage at BEST market rates that are usually substantially lower than those offered by CHIP. The best feature is that it does not require any payment, as long as the mortgage debt remains under 50% of the value of the home. It is structured as a line of credit, and for certain people can be a great alternative to a reverse mortgage.

It is also perfect for those clients that want something similar to a reverse mortgage but do not meet the minimum age requirement of 55. It is well suited to clients that would like the flexibility of not making payments, but are welcome to do so if they choose. It is a mortgage for those that like the idea of a CHIP reverse mortgage but are uncomfortable with the higher interest rate at which they are available.

Many clients are comfortable with a CHIP mortgage, but want to borrow more than the modest loan-to-values available with that product. This accrual-style mortgage is perfect for those that need to mortgage a higher amount than CHIP allows for.


Advantages

  • Has a lower interest rate than a reverse mortgage;
  • Can lend to 50% of the value of your home regardless of your age;
  • No fees to set-up ~ legal and appraisal are covered by the lender;
  • Income, job history and debt guidelines are very, very flexible;
  • Available in first or second position;
  • No penalties to payout the mortgage in part or in full at any time; and
  • Payments are optional up until a certain LTV is reached.

 

Disadvantages

  • Minimum credit score requirements;
  • Interest-only payments may eventually be required;
  • Cannot lend beyond 50% of the value of the property;
  • Monthly banking fee