Details About the CHIP Home Income Plan

Homeowners 60 or older may be able to unlock up to 40% of the value of their homes. The specific amount is based on their home’s current appraised value, their age and that of their spouse, and on the location and type of home. CHIP Home Income Plan proceeds are received tax-free and will not affect eligibility for income-tested government benefits.

Protection of home ownership

• With a CHIP Home Income Plan, title to the home remains in the homeowners names.
• Clients have complete freedom to sell their home or move at any time.
• Homeowners will never be asked to move or sell to repay the loan. All that is required is that homeowners maintain their property and stay up-to-date with property taxes, fire insurance premiums and any condominium and maintenance fees.

Payment terms and options

• No payments are required while the clients continue living in the home
  (other than on Additional Funds)
• The full amount only becomes due upon the passing of the last surviving spouse, when the home is sold, or if the clients move out.
• Interest is added to the outstanding balance and is compounded semi-annually.
• Clients may choose a fixed rate with a variety of terms (6-month, 1-year, 3-years or 5-years) or a variable rate with no fixed term.  
• Paying down some or all of the interest helps reduce the cost of the loan, and preserves even more equity for clients and their heirs.
• Clients have the option to repay in full at any time. When the client repays, an interest rate differential will apply. If the client repays within the first three years, a prepayment amount will apply. These will be waived in the event of death. These will be reduced in the event of a move to a long-term care facility or retirement residence.
  
  Click here for current interest rates, interest rate discounts and payment options

   Impact on the estate

• We guarantee that the loan amount to be repaid will not exceed the fair market value of the home at the time it is sold.
• After the CHIP Home Income Plan is repaid, the estate retains all remaining proceeds from the sale of the home.
• When the estate is settled, the CHIP Home Income Plan may be deducted from the estate’s total value to reduce Probate Fees or the Estate Administration Tax payable where applicable.
• The heirs are not required to sell the home if they choose to repay with funds from another source.
• In more than 20 years of our experience, 99 out of 100 homeowners have money left over when their CHIP Home Income Plan is repaid. On average, the amount left over is at least 50% of the value of the home when it is sold.

In this illustration, home equity appreciates by 5.10% annually (Source: CREA, Canadian Real Estate Association, 15-year national house appreciation average, September 2009) with a CHIP Home Income Plan initial interest rate of 3.75%. These assumptions are not indicative of future market performance or interest rates. Actual results may vary.