Facts and common misconceptions about Home Equity Mortgages
– As soon as you are approved for a reverse mortgage in Canada, you are accepted for life.
– Anyone can easily meet the requirements for a home equity loan no matter what your credit rating is or your income level.
– Most individuals will still have equity remaining in their residence when they decide to sell it and in generally HomEquity Bank customers average around 50% equity kept in their property.
– Nobody is allowed to sign final documentation for a reverse equity mortgage without having first received Independent Legal Advice from their lawyer. This requires all Canadian seniors must receive independent counsel before a reverse mortgage can be prepared.
– The CHIP mortgage program is not complicated, and many people have characterized setting up these home loans as one of the least complicated financial transaction they have ever arranged.
– Reverse home loan rates are not as expensive as many people think, and can be as low as Prime plus 1.25% they can be less expensive than a line of credit or second mortgage.
– The money is always tax free because it is a loan and not actually income as defined by the Canada Customs and Revenue Agency.
– In the event that one spouse passes away, there will be no changes to the terms and conditions of the equity financing arrangement. The equity does not have to be repaid and you do not have to move or re qualify.
– Using the equity in your home can provide an opportunity to diversify your retirement portfolio. There are investment opportunities which pay higher returns than the interest on a CHIP mortgage. This difference can create an income over and above the reverse mortgage payments received.
– If part or all of the CHIP funding is used for investment, there is an option to repay the interest each year and preserve your equity.
– The interest cost associated with a CHIP reverse equity mortgage are also offset somewhat by rising home values.
The rules in Canada are different when it comes to this type of financing, please do not look to U.S. sources for information. For Canadian relevant information visit: www.barriemortgagebroker.ca/reverse-mortgages/
VERICO The Mortgage Wellness Group Ltd.
Call (705) 717-5598
For more information on The Canadian Home Income Plan you can visit the Canadian Government’s website: www.cmhc-schl.gc.ca