A reverse mortgage is specifically designed for the financial needs of seniors. A reverse mortgage can be taken out on a home or condo and the youngest person on title must be at least 55 years old. Unlike traditional mortgages, a reverse mortgages does not require any payments while you live in the home. Some seniors choose to make monthly interest payments although most people prefer paying back the reverse mortgage when they sell the house.
As a general rule for smaller prepayments 10% of the amount owing can be paid once a year (provided the payment is made within 30 days of your anniversary date) without a prepayment charge.
Within the first three years of receiving your mortgage
If you pay off your reverse mortgage within the first three years of receiving the funds the prepayment charge is calculated as follows:
0 to 12 months ———————–> 5% of the amount you pay back
13 to 24 months ——————> 4% of the amount you pay back
25 to 36 months ————————> 3% of the amount you pay back
Death ————————————-> No prepayment charge
Moving to nursing home ——> Charge reduced by 50%
Please keep in mind that the reverse mortgage penalties listed above is only applicable to payments of more than 10% and outside 30 days of the anniversary date.
After 3 years of receiving your mortgage
3 months interest on the amount you pay back
Death ——————————–> No prepayment charge
Moving to a nursing home —————-> Charge reduced by 50%
To avoid all prepayment charges from a full payout of your reverse mortgage you need to wait 5 years from the initial advance and within 30 days following interest term
There are three costs to set-up a reverse mortgage:
- House Appraisal – Usually between $250 – $400+ and typically take 2-4 business days.
- Independent Legal Advise (ILA)- A requirement of the CHIP Home Income Plan is that all legal documentation must be signed in front of a lawyer. An ILA typically costs between $300 – $600.
- Legal Fees and Closing Costs – CHIP Home Income Plan charges $1,795 to cover administration and set up costs.
There are no cost for our services and all costs above can be deducted from the proceeds of your reverse mortgage. Once funded there are absolutely no ongoing fees as long as you live in your home.
Reverse mortgage rates are higher because you can choose to never make a payment. You are guaranteed to never have the loan exceed the value of your home and you still have the advantage of the home appreciating in value.
Absolutely 100%. A CHIP reverse mortgage does not take ownership away from you. Like traditional mortgages, a reverse mortgage is registered on title, but the home remains in your name.
The Canadian Home Income Plan (CHIP) has over 21 year track record. About 99% of CHIP clients have equity left over when they decided to sell – about 50% on average is left over.
A reverse mortgage is ultra conservative and advances are carefully calculated to make sure there is equity left over when it comes time to sell. You also have to keep in mind that the property value will continue to appreciate over the life of the mortgage.
Reach out so that we can provided a detailed projection of how much equity would be left.
The amount of money you will qualify for depends on several factors:
- Your age
- Your home type
- Appraised home value
To find out how much you qualify for RIGHT NOW click: Reverse mortgage calculator.
There is no limitations with the equity advance of a reverse mortgage, in the past our clients used their equity for:
- Supplement pension income
- Help grandchildren with their education
- Elimination of current debt
- Home renovations
- Purchase another property
For the majority of Canadian seniors, owning a home provides a sense of pride and financial security. With equity being built up year over year getting access to funds is sometimes is a challenge. Many seniors do not want to incur the costs of downsizing such as: Realtor fees, legal fees, and moving costs. Not to mention the effort of cleaning, packing, deciding what furniture to keep, sell or donate. With no monthly payments a reverse mortgage allows you to avoid those challenges and costs while staying in the comfort of your home and neighborhood you enjoy.