what is a chip reverse mortgage

CHIP is a Canadian reverse mortgage offered by HomeEquity Bank that lets homeowners age 55+ borrow against home equity without selling their home or making monthly mortgage payments. The money is usually repaid when the home is sold, the owner moves out, or the last borrower passes away.

Quick Scoop

A CHIP reverse mortgage is a loan secured by your home, not a grant or government benefit. You can typically access up to 55% of your home’s appraised value, and the funds are generally paid as tax-free cash.

How it works

• You keep living in your home and retain ownership.

• You receive money as a lump sum, or sometimes in scheduled advances over time.

• You do not make regular mortgage payments while you live there, but interest and fees are added to the balance.

• The loan becomes due when the property is sold or no longer your principal residence.

Main tradeoffs

CHIP can help retirees unlock home equity for retirement spending, debt repayment, renovations, or other needs. The downside is that the balance grows over time because interest accrues, so it can reduce the inheritance or remaining equity in the home.

Important protections

CHIP is marketed with a “no negative equity” guarantee, meaning borrowers generally will not owe more than the home’s fair market value when the loan is repaid, as long as basic obligations like taxes and insurance are maintained. Eligibility and borrowing amount depend on factors such as age, home value, location, and property type.

In plain language

Think of it as turning part of your house into cash while staying in it. That can be useful if retirement income is tight, but it is usually best to compare it with refinancing, downsizing, or a home equity line of credit before signing.

TL;DR

CHIP is Canada’s best-known reverse mortgage for homeowners 55 and older, offering tax-free access to home equity with no monthly payments until the home is sold or vacated.