CHIP Reverse Mortgage: An Honest Look from an Independent Broker

Who makes CHIP

HomeEquity Bank is a Schedule 1 Canadian bank with its head office at Royal Bank Plaza in downtown Toronto. It has offered reverse mortgages for decades, and CHIP is the product name you'll see at most of Canada's big banks, at many credit unions and through mortgage brokers like us. Whoever you go through, the loan itself is with HomeEquity Bank.

The four CHIP products, side by side

All four need you and your spouse to be 55 or older and the home to be your primary residence. All four have no required monthly payments and come with HomeEquity Bank's no negative equity guarantee: as long as you keep up the conditions (property taxes, home insurance and upkeep), you won't owe more than the home's fair market value when it's sold. That guarantee doesn't cover fees and interest that build up after the loan comes due.

• CHIP Reverse Mortgage: the standard plan. Up to 55% of the home's value, usually as a lump sum. HomeEquity Bank lists a minimum appraised value of $250,000.
• CHIP Max: built for owners about 55 to 75 who want a larger share of their equity. A lump sum with optional later advances. Minimum home value $300,000.
• CHIP Open: a short-term option you can repay in full at any time with no prepayment penalty, for example as a bridge before a sale. It can convert to a standard CHIP if you decide to stay. Minimum home value $300,000.
• Income Advantage: monthly or quarterly deposits instead of one lump sum, after an initial advance of at least $20,000. Useful when the goal is steady retirement income.

There are closing costs, usually taken from the loan proceeds, and you'll also pay for the appraisal and your own lawyer for independent legal advice. We'll confirm current fees and any promotions when we quote. CHIP rates come in fixed and variable terms. We'll get you current quotes rather than post them here, because they change often.

When CHIP is a good fit

• You want the lender most Canadian banks and advisors already know, with a long track record.
• You want a choice of how to receive the money: a lump sum, larger later advances (CHIP Max) or regular income (Income Advantage).
• You may sell within a few years and want to avoid prepayment penalties (CHIP Open).
• Your home is in a city or large town and is worth at least $250,000.

When another lender may suit you better

• You're 70 or older and want the most you can get: Equitable Bank publishes up to 59% of home value on its plan for owners 70 and older, which can be more than CHIP offers for some people.
• You'd like the option to make payments: Bloom Finance lets you make monthly interest payments or pause them as needed, which slows how fast the balance grows.
• Your home, location or condo building doesn't fit CHIP's rules: each lender treats property types and locations differently, so a home one lender passes on may suit another.
• You don't actually need a reverse mortgage: if you can carry a payment, a HELOC or refinance usually costs less in interest. If property tax is the pressure, a municipal seniors program may be enough.

We'll put the options next to each other, features and costs, before you choose. Read more about Equitable Bank, Bloom and other reverse mortgage lenders on our main page.

Why go through a broker for CHIP

If you walk into a bank branch, you'll usually be offered CHIP and only CHIP. Through a broker, you can still get CHIP, but you also see what Equitable Bank and Bloom would do for the same home, and whether a non-reverse option is cheaper. One conversation, several answers.

We also help with the parts that worry families: getting the appraisal booked, explaining every fee, and making sure your lawyer has what they need for the independent legal advice that Ontario requires. Adult children are welcome on the call.

Example: CHIP or something else? (illustrative)

Example only, not a real client. A widow, 78, in North York wants about $200,000 to pay off a HELOC and fund in-home care. She's not sure she'll stay in the house more than a few years. We'd compare the standard CHIP, CHIP Open (no prepayment penalty if she sells) and Equitable's plan for owners 70 and older, and check whether her bank would keep the HELOC open instead. She'd see the costs of each over a few likely timelines before deciding, with her daughter on the call.

Want a quick ballpark first? Try our reverse mortgage calculator.