The ins and outs of a reverse mortgage

(NC)—For many Canadians, the thought of retirement is an exciting one, conjuring up images of travel, days spent at the cottage and visits with grandchildren. Unfortunately, some seniors are caught off guard by the expenses associated with retirement and a pension might not always be enough to make ends meet.

This is why more seniors are turning to reverse mortgages to increase their cash flow and enjoy a more satisfying retirement. A reverse mortgage is a special type of loan that converts the equity built up in your home into cash. For more than 20 years, CHIP Home Income Plan has been providing a simple and sensible solution to help increase the financial stability of Canadians 60 years of age or older.

But when it comes time to investigate the option of a reverse mortgage for yourself, or a loved one, be sure to consult with a financial planner and develop a clear plan to ensure you get the most out of your reverse mortgage.
Here are some common questions to consider:

• How important is home ownership to you?
- Reverse mortgages are ideal for those looking to stay in their homes as the full amount of a reverse mortgage only becomes due if the home is sold, or if the homeowner decides to move.
- You also maintain ownership and control of your home and, once it is sold, you keep all the equity that is left over once the reverse mortgage is repaid.
• How much equity can you access?
- Through a CHIP Home Income Plan, seniors can receive up to 40 per cent of their home's current appraised value. CHIP first provides an estimated amount based on the age of the homeowners, location and type of home, and its estimated value. The money can be taken in one lump sum or in regular advances over time.
- You receive the money tax-free and no payments are required, so the full amount only becomes due when you choose to move or sell. The interest on the loan is simply added to the outstanding balance.
• In what ways, can a reverse mortgage, like a CHIP Home Income Plan be used?
- There is a wide range of needs and wants that can be addressed with the CHIP Home Income Plan solution, including improved cash flow for monthly expenses, estate planning, and investment preservation and maintaining an overall good standard of living during retirement.

More information on this topic is available online at www.chip.ca or toll-free 1-866-522-2447.

Source: www.newscanada.com
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