We recently had a client come in to discuss options for his parents, who were still happily living in the house that he grew up in here in the Comox Valley. They were both retired and living on CPP and OAS pensions, and while they were covering their basic monthly expenses, they didn’t have much in the way of savings. The property was starting to show its age and there were several large expenses on the horizon: the old oil furnace wasn’t working well anymore, the asphalt roof shingles were curling and they anticipated needing to renovate the bathroom soon to make it more accessible with a walk-in bathtub.
In a case like this, a traditional mortgage sometimes doesn’t work for clients as there isn’t enough income from pension sources to qualify. Instead, we ended up recommending a CHIP Reverse Mortgage, a product designed exclusively for homeowners aged 55 years and older that enables the borrower to convert up to 55% of the property’s value into tax-free cash. The funds from a reverse mortgage can be used for whatever the clients desire; to cover monthly expenses, renovate the property, pay-off debt, travel, etc. Qualification is not based on income but on a more holistic picture that takes into account the equity of the property, and using a reverse mortgage the clients maintain ownership of the property and are able to continue living there for their retirement years. There are no monthly mortgage payments required so it doesn’t put any stress on monthly living expenses and the budget the clients are comfortable with, and repayment of the loan is only required once the clients chose to move or sell.
If you have questions about CHIP Reverse Mortgages and how they work, please give us a call today! We’d be happy to provide a free consultation appointment and tell you the pros and cons of this type of option for your specific situation.