A Great Product for Seniors to Access Home Equity without increased Payments

CHIP is rapidly gaining popularity across Canada, and it is easy to understand why. The senior population is the fastest growing group in the country and they are living longer than ever before. CHIP offers secure and flexible access to an otherwise illiquid asset. Plus, since becoming a schedule 1 bank the provider of CHIP, HomEquity Bank, is able to offer increasingly competitive rates.

CHIP is often used to help seniors stay in their homes, but you can also use it to provide your clients with creative solutions when they are moving. Here are some ideas of ways CHIP could benefit you
:
1. Downsizing


Many seniors choose to downsize to pay off debt and increase retirement income. Unfortunately, this often means relocating to a different neighborhood or an inferior house. CHIP can help you help your clients down size financially, without harming their quality of life.

Example: You help clients sell their $500,000 home, which leaves them with $300,000 after paying off their debt.

They want $100,000 for retirement income, which only leaves $200,000 to buy their new property and limits them to a small apartment. So, you suggest a CHIP for $100,000 which would allow them to buy a townhouse. They have no payments, keep their $100,000 in cash, and you sell a higher priced home.
2. Upgrading


You can help clients who want to upgrade but cannot with their current income level. By applying the proceeds of their sale as a down payment, and using CHIP to complete the purchase, your clients can have the upgrad e they did not think was possible without ever having to make monthly payments.

Example: Your clients own a $600,000 home that is becoming too much work. They want to move to a Vancouver water front condo, but the price is $1,000,000 and they cannot afford a $400,000 mortgage. After selling the house, they put $600,000 on the condo and use CHIP for the remaining $400,000. You help your clients upgrade their lifestyle without increasing their expenses.
3. Purchasing a Vacation Property
 
Retirees may rent a vacation home because their income is not high enough to qualify for a mortgage on a second property. You can use CHIP to help them buy the vacation property of their dreams by using some of the equity in their primary home.

Example: Your clients own a $950,000 home and want to buy a $275,000 cottage. You help them utilize CHIP to unlock just under 30% of their home’s equity and use it to buy the cottage. They have improved their quality of life and you have gained a sale.


4. Providing a Down Payment for Children Buying a Home
 Often, parents would like to help their children financially but cannot do so without decreasing their quality of life or incurring debt with monthly payments. CHIP can be a great way for parents to assist their children, without making sacrifices, when it will be the most beneficial.

Example: A 30 year old couple wants to buy a rental income property worth $400,000 but they need a 20%

down payment. Their parents have a $450,000 house, so you help them use CHIP to access $80,000 to give to

their children for a down payment. This helps the couple purchase the property, and gives you a purchase that

may have had to wait until when, or if, they have more money.

For more information on the CHIP Program contact me elwells@telus.net