What Are the Pros and Cons of the CHIP Program?
There are several factors to consider before deciding to proceed with a reverse mortgage. As with any big decision, it’s helpful to speak to family and friends and fully understand the pros and cons of the reverse mortgage in Canada. Some of the pros and cons include:
You receive the reverse mortgage funds as tax-free cash and you can spend the money anyway you like!
You stay in the home you love and maintain ownership and control of your home. All you must do is maintain your property and pay your property taxes and homeowners insurance.
There are no monthly mortgage payments required until you decide to move or sell your home.
The CHIP Program is a non-recourse loan which means that at the time of repayment, you (or your estate) will never owe more than the fair market value of your home – as long as you have maintained your property taxes and insurance.
It is your choice how you receive the funds from the CHIP Plan. You can receive it all at once in a lump sum or in scheduled advances over time – its up to you!
Because there are no monthly mortgage payments required, interest rates for the CHIP Plan tend to be higher than that of a traditional mortgage option.
The balance of the loan increases over time as does the interest on the loan.