Types of Reverse Mortgage Rates
CHIP Reverse Mortgage rates are available in two different formats: fixed terms or variable terms. Variable term rates are determined by the HomeEquity Bank prime rate, which is directly influenced by the Bank of Canada prime rate. A variable rate may fluctuate up or down over the course of the term, which is why it is called “variable”. A fixed term rate, on the other hand, is set for a determined period, which is why it is called “fixed”. The CHIP Reverse Mortgage fixed term rates are available for a sixmonth, 1-year, 3-year or 5-year period. Clients typically prefer longer terms, such as the 5-year, but the choice is yours!
At the end of your reverse mortgage rate term, your renewal rate will be the interest rate that is posted here when your rate term expires. Let’s look at a couple of examples to understand reverse mortgage rates offered by CHIP.
Example 1 – 5-year reverse mortgage interest rate term
You have a home valued at $600,000 and you are approved for a CHIP Reverse Mortgage of $200,000. Remember, the amount we lend depends on several factors, such as your age, home value and location. If you decide to proceed, you will have a choice of reverse mortgage interest rate terms. Let’s say you choose the 5-year term. Your first term interest rate will be fixed at the interest rate found in the table above. At the end of the 5 years, you will check back on this website, and your renewal rate will be what is posted in the table at that time.
Example 2 – Variable reverse mortgage interest rate term
Let’s consider the same example: a home valued at $600,000 and $200,000 in CHIP money. For this example, you decide to take a variable term rate. Your initial interest rate will be the HomeEquity Bank prime rate plus the fixed spread – all outlined in the table above. If the Bank of Canada changes its prime rate, then more than likely HomeEquity Bank prime will change. Your variable rate would then change to the new HomeEquity Bank prime rate plus the fixed spread, which is guaranteed for a five-year period.
If you have any questions about the CHIP Reverse Mortgage rates or if you are interested in understanding more about Reverse Mortgage, you can contact us here. If you have any other questions, feel free to give us a call at 1-905-923-0818.