According to the Financial Post, 68% of Canadians have had to dip into emergency funds due to an unexpected event. However, fewer than half of those were able to cover the full cost.
In light of this, HomeEquity Bank is excited to introduce a new product to its robust suite of Reverse Mortgage solutions, CHIP Open. CHIP Open is tailored to Canadian homeowners 55+ who are in need of short-term access to finance and have equity in their homes.
What is CHIP Open?
CHIP Open allows you to release up to 55% of the value of your home for short-term needs such as bridge financing or an investment property purchase. Its qualification criteria are tailor-made for retired Canadians – making it ideal for Canadian homeowners 55+ who may have been turned down for traditional loans.
In contrast with the CHIP Reverse Mortgage, which you may use for a longer-term need, CHIP Open gives you the flexibility to repay 100% of the balance at any time, with – most importantly – no prepayment penalties.
Additional benefits of choosing CHIP Open by HomeEquity Bank include the flexibility it allows. If you decide that you don’t want to pay off the loan in the short term, you can easily convert it to the CHIP Reverse Mortgage and defer any repayments until you sell your home or pass away.
What is CHIP Open for?
There are many situations in which CHIP Open may be the right solution for you.
Upgrading your home
Many people opt to renovate their home before putting it on the market in order to increase its desirability and assure maximum sales price. To pay for the renovations, you could take out the CHIP Open, which you can pay off when you sell your home at the increased value.
Bridge financing
Another reason you might opt for CHIP Open is to use it as bridge financing if you’re planning on moving. Perhaps you’ve found your dream home but aren’t yet in a position to sell your existing house – maybe you haven’t found a buyer yet or the buyer has fallen through. In this case, you could use CHIP Open as a bridging loan, using it to cover both your existing and your new home until you’re able to sell, before using the proceeds to pay off the CHIP Open Reverse Mortgage.
Helping out a loved one
The economic upheaval caused by the COVID-19 crisis has seen unemployment in Canada rise to 12%, with Millennials the worst affected group. It’s not surprising, therefore, that many Canadians 55+ want to help out their adult children financially.
In this situation, the parent could release cash from their home in order to provide support for their loved one until they get back on their feet. Once the child has a job again, they can pay back their parent who can then pay off the CHIP Open. Alternatively, if the adult child is not able to pay back the money, the loan can be converted to the CHIP Reverse Mortgage and treated as a pre-inheritance.
We never know when an unexpected event is going to crop up. And whether that event is an opportunity or a setback, it’s important to know what the best options are to access cash without negatively affecting your financial health.
If you want to know more about how CHIP Open may be the best short-term financing solution for you, contact your DLC Mortgage Broker who will work to create a customized mortgage solution for your specific financial needs.
*This post was written by Agostino Tuzi who is the National Partnership Director, Mortgage Brokers at HomeEquity Bank.