Canadas Reverse Mortgage System Looking Exceptional, But Different

Canadas Reverse Mortgage System Looking Exceptional, But Different

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Canadas reverse mortgage system looks pretty solid from the U.S.s perspective, yes, but are our two countries fair to compare? Probably not and heres why.
Just as reverse mortgages have become more popular as borrowers gain favorable loan terms and 70 million baby boomers begin their move into retirement, so too have reverse mortgages seen a boost in popularity in Canada, our northern continental neighbors who, besides their obsession with hockey, are not all that dissimilar to us in cultural affairs and demographics.
But the Canadian Home Income Plan, also known as CHIP, essentially the only reverse mortgage program offered in Canada, has been a very successful endeavor for borrowers and lenders alike, relatively speaking. Well, actually theres really only one lender, HomEquity Bank, the primary source originator of reverse mortgage loans in Canada. The banks reverse mortgage asset portfolio has logged a total of about 7,800 reverse mortgage loans with an accrued value of $985 million, secured by $2.7 billion worth of residential property values.
Currently, a CHIP reverse mortgage charges the prime interest rate plus 1.75%, not far off from the adjustable rate US counterpart. Also, the proceeds from a Canadian reverse mortgage are distributed tax free, just as they are here in our system.
So can the U.S. take some tips from our neighbors to the north? Maybe when it comes to hockey tips on what players can do to win a championship, but thats where the similarities probably end.
The minimum qualifying age for a CHIP is 60, compared with 62 for the U.S., and there are just 7 million Canadians that age or older. 7 million doesnt seem like such an impressive number when compared to our 70 million baby boomers, but it is a big number when you consider Canada only has a total population of about 33 million.
The reverse mortgage industry in Canada is much smaller and narrower, and therefore much more manageable when compared to our enormously competitive and growing marketplace. But CHIPs are still very proportionately popular, and the program is expected to undergo some innovations in the coming years our system has already adopted to bolster the growing demand.
These include more flexible payment options and an introduction of additional product features that will enable an even broader segment of Canadian seniors and homeowners approaching retirement to put their home equity to work for them, says Steven Ranson, President and CEO, HomEquity Bank. Good luck with that, eh!

About the Author:
With Legacy reverse mortgage you can learn about programs to get reverse mortgage quote . You can also find an effective way to calculate the money available to you with their Reverse Mortgage Calculator.



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