• Robert Floris CFP, AMP
    Lead Mortgage Agent
    M08004919
    905-966-1453

  • How Much Can I Get From A CHIP Reverse MortgageHow Much Can I Get From A CHIP Reverse Mortgage?

    This is another question we receive daily in our office. And the answer to How Much Can I Get From A CHIP Reverse Mortgage depends on 2 main factors:

    1. How old are you?

    When calculating How Much Can I Get From A CHIP Reverse Mortgage, one of the main factors is your age. Why, you may ask? The answer is very simple. When the CHIP Reverse Mortgage lender provides you with the mortgage funds, they will not receive a penny of profit until you move or sell your home. And in case you didn’t know, banks are out to make a profit. 🙂 Therefore, it follows that the older the borrower is, the sooner they will receive their money back (with interest of course).

    55 Years Is The Age Threshold

    This is why they have set an age threshold of 55 years. Generally speaking, the older you are, the more money you will qualify for. The likelihood is that you will move into a retirement home or nursing home and your existing home will be bought out by a family member or sold to a third party. Imagine if they gave a reverse mortgage to an 18 year old. Theoretically, that homeowner could remain in the home for 70 years and that’s how long the bank would need to wait to get their money back! So when you ask the question How Much Can I Get From A CHIP Reverse Mortgage, that is one of the first questions we will ask: how old are you?

    2. What is the value of your home?

    This point is just as, if not more, important than your age when it comes to the question How Much Can I Get From A CHIP Reverse Mortgage. Why? Again, you need to see this from the lender’s perspective. They want to make sure that they get their money back some day, with interest.

    Principle Amount Must Be Secured

    Firstly, the money that they lend needs to be secured against the value of your home. If your home is worth $400K, they don’t want to lend you $400K because it is not secure. This would be considered 100% loan-to-value financing. Thus, when deciding How Much Can I Get From A CHIP Reverse Mortgage, they need to factor in a buffer. They won’t cut it that close. How close will the cut it? 55%. In other words, the maximum that they would lend on a $400K home would be $220K. And that’s under the best case scenario. The lender also checks the location of your home for “marketability”. They need to know that it will sell easily.

    Interest Must Be Factored

    Secondly, based on your age, they statistically calculate how long you are expected to remain in your home. That dictates how much interest will be collected on the mortgage funds when you do move out and/or sell. If we continue with the scenario above, one of the other reasons why they will only lend up to $220K on the $400K home is because they will need to recuperate not only their initial $220K, but also interest for 5, 10, 15, 20 years or more!

    So, I hope that now you can see that it makes sense from their perspective that the value of the home and your age both play a HUGE role in dictating How Much I Can Get From A CHIP Reverse Mortgage.

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215.

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