Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.
CHIP Reverse Mortgage at a glance
HomeEquity Bank, the company behind CHIP Reverse Mortgages, is one of only two financial institutions in Canada that offer reverse mortgages.
- A reverse mortgage is a loan that allows homeowners over age 55 to access equity in their home tax-free without selling the home.
- HomeEquity Bank is one of two banks in Canada that offer reverse mortgages, and the CHIP Reverse Mortgage is its most popular option.
- HomeEquity Bank began offering reverse mortgages in 1986 under its previous name, CHIP (which stands for Canadian Home Income Plan).
- The bank managed more than $6 billion worth of reverse mortgages as of January 2023.
The CHIP Reverse Mortgage is just one of the reverse mortgage products offered by HomeEquity Bank. Others include:
- CHIP Max.
- CHIP Open.
- Income Advantage.
Pros
- Access up to 55% of your home’s equity tax-free.
- The money you borrow does not impact your Old-Age Security or Guaranteed Income Supplement benefits.
- No monthly or regular payments required.
- Keep possession of your home.
Cons
- Higher interest rates compared to traditional mortgages and some HELOCs.
- Fees that could add thousands of dollars to the cost of your reverse mortgage.
- Exchanges long-term equity growth for short-term financial flexibility.
CHIP Reverse Mortgage review
Originally called the Canadian Home Income Plan, this loan was rebranded as the CHIP Reverse Mortgage as HomeEquity Bank added more reverse mortgage products. Although HomeEquity Bank is a Schedule 1 Canadian Bank, it’s one of only two banks in the country that offer reverse mortgages.
Reverse mortgages aren’t like traditional mortgages, in which you borrow money to help you purchase a home. To get a reverse mortgage, you must already own a home.
A reverse mortgage allows you to borrow money from the equity you’ve built up over the years you’ve owned your home. You can access up to 55% of your home equity as either a lump sum or an initial advance with additional payments spread out over time.
As a direct lender, HomeEquity Bank offers a variety of reverse mortgage products, but the CHIP Reverse Mortgage is easily the most popular option. Interested prospective borrowers can apply online or call HomeEquity Bank to get an estimate based on the value of their home.
Any funds borrowed through a reverse mortgage are tax-free, so it’s a potential way for older Canadians to use their home equity to pay off debt, cover medical expenses, pay for renovations and more. However, it’s important to consider the pros and cons of reverse mortgages before signing up so you understand whether this type of loan is the best fit for your needs.
Who is a CHIP Reverse Mortgage best for?
A CHIP Reverse Mortgage may be a good choice for homeowners over the age of 55 with good credit who would like to turn their home equity into cash without selling or refinancing.
If you meet eligibility requirements, are physically able to maintain and repair the home, and you have the financial ability to pay your property taxes and home insurance premiums, a reverse mortgage may be a worthy alternative to a second mortgage. As with all mortgage application processes, HomeEquity bank will check your credit, and your score will influence the decision to approve you or not.
CHIP Reverse Mortgage feature overview
Mortgage variety
In addition to its original CHIP Reverse Mortgage, HomeEquity Bank also offers:
- IncomeAdvantage, which provides regular monthly advances.
- CHIP Max, which provides more equity to younger borrowers.
- CHIP Open, which offers short-term financing and an option to repay the full loan at anytime.
Ease of application
Reverse mortgages are unique products, so applying for one online with HomeEquity isn’t possible.
- Online pre-qualification: Sort of. You can use the “Get My Estimate” function to receive a quote stating how much you might be able to borrow.
- Online pre-approval: No.
- Online mortgage application: No.
- In-person option: No. You’ll have to contact HomeEquity Bank either by phone or email.
Reverse mortgage rate transparency
HomeEquity Bank is quite upfront about the rates related to its CHIP products.
- Posted rates: Posted rates are published for each loan type.
- Special rates: Special rates are available, but only for a traditional CHIP Reverse Mortgage.
- APR: HomeEquity Bank provides annual percentage rates for its discounted mortgage rates.
Other details:
- Fees can range from $1,795 to more than $3,000.
- No negative equity guarantee: As long as you meet your mortgage obligations, you will never owe more than what your home is worth.
- No regular principal or interest payments.
- Make lump-sum payments: Prepay up to 10% of the outstanding principal and interest within 30 days of each anniversary date.
- Prepayment penalties vary, but can rise as high as 5% of your combined principal and interest amount.
» MORE: Read our comprehensive guide to reverse mortgages
Customer satisfaction ratings
Based on NerdWallet analysis of satisfaction scores on several customer review websites, it’s likely that most customers are satisfied with their experience of getting and having a CHIP Reverse Mortgage from HomeEquity Bank. Keep in mind that the reviews aren’t verified and may not accurately reflect the average opinion of CHIP customers; for example, happy or unhappy customers may be overrepresented in these reviews. Nevertheless, these sites are one way to learn about possible downsides to consider.
- CHIP Reverse Mortgage had a Trustpilot rating of 4.8 out of 5 possible stars based on more than 1,300 customer reviews, as of this writing.
- CHIP Reverse Mortgage had 3.46 out of a possible 5 stars on the Better Business Bureau website, as of this writing. However, this rating was based on only 13 reviews. CHIP Reverse Mortgage is not accredited by the BBB itself.
CHIP Reverse Mortgage eligibility requirements
To qualify for a CHIP Reverse Mortgage, you’ll need to meet the following requirements:
- You must be a Canadian homeowner.
- The home must be your primary residence.
- All homeowners on the title must be at least 55 years old.
- The value of your home must be at least $250,000.
In addition, HomeEquity Bank will also consider the following criteria before approving your application:
- Type of home (detached house, condo, etc).
- Location.
- The amount of equity you have.
- The condition of your home.
HomeEquity Bank offers a reverse mortgage calculator on its website that allows you to quickly see how much a reverse mortgage could allow you to borrow based on your age, postal code, city, home type and estimated value. However, the actual amount offered to you will vary based on the details of your application.
A CHIP Reverse Mortgage is not available to homes in the Northwest Territories, the Yukon and Nunavut.
How to apply for a CHIP Reverse Mortgage
You can’t apply for a reverse mortgage with HomeEquity Bank online. To do that, you’ll have to call the bank (1-866-758-2447) to speak with a mortgage specialist. You can, however, get a free estimate of how large a reverse mortgage you might qualify for.
When you reach the HomeEquity Bank website, hover over the “Products” tab and click “Our Products.”
On the following page, click either “Reverse Mortgage” or “CHIP Reverse Mortgage.”
At the top of the next page, click “Get My Estimate”.
Enter a few details about your home (address, estimated value) and yourself (age, contact information) and you’re all done.
Frequently asked questions about the CHIP Reverse Mortgage
CHIP stands for “Canadian Home Income Plan,” which was the original name of the popular reverse mortgage product offered by HomeEquity Bank.
One of the primary drawbacks of all reverse mortgages is that they come with relatively high interest rates that will be in effect for as long as a loan is active.
Selecting the right reverse mortgage provider is a big decision — even with a limited number of options. You’ll need to do some research, make a list of what’s important to you, and spend some comparing the following:
- Rates: Will you choose a fixed interest rate or variable? And how competitive are the rates offered by the reverse mortgage provider you’re considering? With only two major players in Canada’s reverse mortgage industry, it may make sense to get quote from both.
- Fees: Both of Canada’s largest reverse mortgage providers charge set-up fees and prepayment penalties. You’ll want to know how these fees work and how much you’ll be paying in both instances.
- How much you can borrow: Both of Canada’s major reverse mortgage providers follow general guidelines about how much of your home equity you can access.
- How you’ll receive your reverse mortgage funds: Will it be as a single lump sum or as a combination of an initial advance and smaller payments spread out over time? There are pros and cons to both; be sure the lender you choose can explain them to you clearly.
About the Author
START YOUR MORTGAGE JOURNEY
3 Ways to Take on a Budget-Busting Mortgage Renewal
With interest rates still high, renewing your mortgage probably won’t be the best part of your 2024. If you’re worried about the impending cost of your home loan, keep these strategies in mind.
What Is a Home Equity Loan?
A home equity loan, also known as a second mortgage or add-on mortgage, lets you borrow against the value of your home.
Kurt Woock
Sandra MacGregor
Find the Best Mortgage Rates in Canada
Compare customized mortgage rates from Canada’s best lenders and brokers for free. Find and easily apply for the lowest mortgage rate for your needs.
Mortgage Payment Calculator: Canada
Use this free Canadian mortgage calculator to estimate your monthly mortgage payments, and see how rates and amortization affect total cost over time.