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What is a Canadian Home Income Plan (CHIP)?

chip reverse mortgage

The Canadian Home Income Plan, also called a CHIP reverse mortgage, is a program in which Canadian homeowners who are over 55 can apply for a home equity loan. The biggest reason many people take advantage of this plan is that no repayment is needed unless they sell their home. Homeowners can make payments if they wish.

A CHIP Reverse Mortgage Pays You

This loan lets homeowners borrow up to half of the value of their home. This can be used as tax-free cash and is their money to spend as they see fit, such as to pay off debt or to make repairs on the house. Another big benefit to this type of loan is that there are no income guidelines for the loan and the bank cannot recall the loan. The homeowners can decide whether to take all of their money at once, called a lump sum, or they can choose to have it given to them in monthly instalments.

Many lenders call this type of loan a reverse mortgage because the CHIP plan pays you every month instead of you making payments to them. Many homeowners love the fact that they do not have to make any type of repayment, not even interest, until they sell their home and move. The length of the loan is only determined by how long you live in your home.

Because the Canadian Home Income Plan maximizes the cash flow you have each month, it is highly recommended by many banks and financial advisors. The amount you can receive for your home income plan is determined by the age of you and your spouse, where the house is and what type it is, and the current appraised value of your home.

You can pay off large debts with a reverse mortgage

This could be a great opportunity for you to pay off large debts, such as medical bills. However, be sure to discuss your options with a trusted financial advisor to be sure this is something you fully understand. The Canadian Home Income Plan is becoming more popular each day and you can find out more at the Senior’s Lending Centre website.

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