Tapping into Home Equity: Why Choose a Reverse Mortgage Over a HELOC?

Jamie Ushko • August 30, 2023

In an era where the cost of living is on the rise, securing a comfortable retirement and maintaining your desired lifestyle can pose significant challenges. Fortunately, for many retired Canadians, a valuable asset lies at their disposal: home ownership. Leveraging the equity you've built in your home can be the key to obtaining the additional funds you need to make the most of your retirement years.

Tapping into Your Home Equity

If you're committed to staying in your current home, there are two popular methods to access your home equity: the Home Equity Line of Credit (HELOC) and the reverse mortgage.

HELOC: HELOC lenders typically permit homeowners to access up to 65% of their home's value. With a HELOC, you can borrow funds as needed, based on an agreed-upon amount, and you'll only need to make minimum monthly interest payments. Unlike a traditional mortgage, there are no fixed scheduled payments towards the loan's principal, providing you with the flexibility to repay the loan at your convenience.

Reverse Mortgage: Another prevalent way homeowners tap into their home equity is through a reverse mortgage. Specifically, the CHIP Reverse Mortgage by HomeEquity Bank is tailored for Canadian homeowners aged 55 and above. It allows you to access up to 55% of your home's value, receiving the funds as tax-free cash, all without the need to move or sell your property. What's more, you won't have to worry about required monthly mortgage payments while you continue to reside in your home. The full loan amount only becomes due when you decide to move, sell the house, or through the estate after the homeowner's passing.



The Advantages of the CHIP Reverse Mortgage

The CHIP Reverse Mortgage offers numerous benefits, with one of the most significant being the absence of monthly mortgage payments. This feature is especially valuable for Canadians aged 55+ when managing cashflow can be a concern. Here are some additional benefits of the CHIP Reverse Mortgage:

  • Simplified Underwriting: The CHIP Reverse Mortgage caters to Canadians aged 55+ who rely on a fixed income and might face challenges qualifying for a HELOC.
  • No Need to Requalify: Unlike a HELOC that requires continuous credit score checks, the CHIP Reverse Mortgage eliminates the need for requalification, ensuring access to funds without credit score barriers.
  • Surviving Spouse Protection: With a HELOC, the passing of a spouse may prompt the bank to conduct a credit score review of the surviving spouse. With the CHIP Reverse Mortgage, the loan doesn't become due until after both homeowners no longer live in the home.
  • Fixed-Term Rate Options: The CHIP Reverse Mortgage provides fixed rate choices, allowing borrowers to lock in rates for up to five years. In contrast, a HELOC's interest rate fluctuates with the Bank of Canada's prime rate, potentially leading to increased borrowing costs in times of rising interest rates.


Ready to Unlock Your Home Equity? Contact Us Today!

Are you ready to explore how the CHIP Reverse Mortgage can help you tap into your home equity and secure your financial future? Don't hesitate to get in touch with us today. We're here to provide expert guidance and answer any questions you may have.

In a world where financial peace of mind is priceless, the CHIP Reverse Mortgage offers a reliable path to unlock your home's hidden potential and ensure a comfortable retirement. Contact us to take the first step toward securing your financial freedom!


Jamie Ushko

Mortgage Broker

New To Mortgage Financing? Get Pre-Approved

By Jamie Ushko • February 19, 2025
If you’re thinking about buying a property, but you’re not sure where to start, you’ve come to the right place! Let’s discuss how getting pre-approved is one of the first steps in your home buying journey. Just like you wouldn’t go into a restaurant without knowing if you have enough money to buy your meal, it’s not a good idea to be shopping for a home without an understanding of how much you can afford. You can browse MLS from your couch all you want beforehand, but when you’re ready to start looking at properties with a real estate agent, you need a pre-approval. Now, as there may be some confusion around exactly what a pre-approval does and doesn’t do, let’s discuss it in detail. First of all, a pre-approval is not magic, and it’s not binding. A pre-approval is not a contract that will guarantee mortgage financing despite changes to your financial situation. Instead, a pre-approval is simply the first look at your overall financial health that will point you in the right direction before you’re ready to apply for a mortgage. Said in another way, a pre-approval is a map that gives you the plan to secure an actual approval. After going through the pre-approval process, you’ll know how to qualify for a mortgage and at what amount. When considering your mortgage application, lenders look at your income, credit history, assets vs liabilities, and the property itself. Working through a pre-approval will cover all these areas and will uncover any major obstacles that might be in your way of securing financing. The best time to secure a pre-approval is as soon as possible; it’s never a bad idea to have a plan. Here are a few of the obstacles that a pre-approval can uncover: You’ve recently changed jobs, and you’re still on probation Your income relies heavily on extra shifts or commissions You’re unaware of factual mistakes or collections on your credit report You don’t have an established credit profile You don’t have enough money saved for a downpayment Additional debt is lowering the amount you qualify for Really anything you don't know that you don't know Even if you believe you have all your ducks in a row, working through the pre-approval process with an independent mortgage professional will ensure you have the best chance of securing a final approval. As a point of clarity, a pre-approval is not the same as a pre-qualification. This is not typing a few things into a website, calculating some numbers, and thinking you’re all set. A pre-approval includes providing your financial information, looking at your credit report, discussing a plan for securing mortgage financing with a mortgage professional, and even submitting documents ahead of time. Mortgage financing can be a daunting process; it doesn’t have to be. Having a plan in place and doing as much as you can beforehand is essential to ensuring a smooth home buying experience. As there is no cost for getting a mortgage pre-approval, there is absolutely no risk. Consider starting the process right now! If you’d like to walk through your financial situation and get pre-approved for a mortgage, let’s talk. It would be a pleasure to work with you!

Collections Can Prevent Mortgage Financing

By Jamie Ushko • February 12, 2025
A question that comes up from time to time when discussing mortgage financing is, “If I have collections showing on my credit bureau, will that impact my ability to get a mortgage?” The answer might have a broader implication than what you might think; let's spend a little time discussing it. Collections accounts are reported on your credit bureau when you have a debt that hasn’t been paid as agreed. Now, regardless of the reason for the collection; the collection is a result of delinquency, it’s an account you didn’t realize was in collections, or even if it’s a choice not to pay something because of moral reasons, all open collections will negatively impact your ability to secure new mortgage financing. Delinquency If you’re really late on paying on a loan, credit card, line of credit, or mortgage, and the lender has sent that account to collections, as they consider it a bad debt, this will certainly impact your ability to get new mortgage financing. Look at it this way, why would any lender want to extend new credit to you when you have a known history of not paying your existing debts as agreed? If you happen to be late on your payments and the collection agencies are calling, the best plan would be to deal with the issue head-on. Settle the debts as quickly as possible and work towards establishing your credit. Very few (if any) lenders will even consider your mortgage application with open collections showing on your credit report. If you’re unaware of bad debts It happens a lot more than you’d think; people applying for a mortgage are completely unaware that they have delinquent accounts on their credit report. A common reason for this is that collection agencies are hired simply because the lender can’t reach someone. Here’s an example. Let’s say you’re moving from one province to another for work, you pay the outstanding balance on your utility accounts, change your phone number, and make the move. And while you think you’ve paid the final amount owing, they read your meter, and there is $32 outstanding on your bill. As the utility company has no way of tracking you down, they send that amount to an agency that registers it on your credit report. You don't know any of this has happened and certainly would have paid the amount had you known it was due. Alternatively, with over 20% of credit reports containing some level of inaccuracy, mistakes happen. If you’ve had collections in the past, there’s a chance they might be reporting inaccurately, even if it's been paid out. So as far as your mortgage is concerned, it really doesn’t matter if the collection is a reporting error or a valid collection that you weren’t aware of. If it’s on your credit report, it’s your responsibility to prove it’s been remediated. Most lenders will accept documentation proving the account has been paid and won’t require those changes to reflect on your credit report before proceeding with a mortgage application. So how do you know if you’ve got mistakes on your credit report? Well, you can either access your credit reports on your own or talk with an independent mortgage advisor to put together a mortgage preapproval. The preapproval process will uncover any issues holding you back. If there are any collections on your bureau, you can implement a plan to fix the problem before applying for a mortgage. Moral Collections What if you have purposefully chosen not to pay a collection, fine, bill, or debt for moral reasons? Or what if that account is sitting as an unpaid collection on your credit report because you dispute the subject matter? Here are a few examples. A disputed phone or utility bill Unpaid alimony or child support Unpaid collections for traffic tickets Unpaid collections for COVID-19 fines The truth is, lenders don’t care what the collection is for; they just want to see that you’ve dealt with it. They will be reluctant to extend new mortgage financing while you have an active collection reporting on your bureau. So if you decide to take a moral stand on not paying a collection, please know that you run the risk of having that moral decision impact your ability to secure a mortgage in the future. If you have any questions about this or anything else mortgage-related, please connect anytime! It would be a pleasure to work with you!
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