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

Establishing New Credit

By Jamie Ushko • April 2, 2025
If you’re new to managing personal finance and you want to learn about credit, you’ve come to the right place. Establishing new credit is a bit of a catch-22. To build a credit history, you need credit. But it’s hard to get credit without having a credit history. So, where do you start? Well, the first thing you should know is that building credit takes time. It’s not something that happens overnight. If you’re looking to secure mortgage financing, you will want to have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for at least two years. If you don’t have any credit yet, the best time to get started is right now. However, that may be difficult because, as we've already identified, without a credit history, most lenders won’t feel confident about taking a chance on you. What’s the solution? Consider a secured credit card. With a secured credit card, you make a deposit upfront that matches the amount you want to borrow. A reasonable amount would be $1000 deposited on a single secured credit card. You then use your secured credit card to make household purchases and regular utility payments, paying off the total balance each month. If you default on the money borrowed for whatever reason, the lender will retain the money you put up as collateral. When looking for a secured credit card, be sure to ask whether they report to the two nationwide credit bureaus, Equifax and TransUnion. If the credit card company doesn't report, the credit card account will be useless for your purposes; move on until you find a company that reports to both credit bureaus. Once your secured credit card begins reporting to the credit bureaus, you begin to have a credit score; usually, this takes about three months. Now you can start to seek out a second trade line in the form of an unsecured credit card. Don’t forget to ensure that this card reports to both of the credit reporting agencies. Another option at this point could be a car loan. From here, you simply want to make all your payments on time! But what happens if you’re looking to secure mortgage financing before you have a fully established credit report? Well, if you have someone who would consider co-signing, you can certainly go that route. The mortgage application will depend on their income and credit report, but your name will be on the mortgage. Hopefully, when the mortgage is up for renewal, you’ll have the established credit required to remove them from the mortgage and qualify on your own. Although establishing credit takes a minimum of two years, it really begins with putting together a plan. If you’d like to discuss anything credit or mortgage-related, please get in touch!

Accessing Your Home Equity

By Jamie Ushko • March 26, 2025
If you've been a homeowner for many years, it is likely your property value has increased significantly. One advantage of homeownership is the opportunity to build equity. Home equity growth, partnered with the security of living in your own home, is why most Canadians believe homeownership is the best choice for them! While home equity is one of your greatest assets, accessing home equity is often overlooked when putting together a comprehensive financial plan. So if you’re looking for a way to access some of your home equity, you’ve come to the right place! Simply put, home equity is the actual market value of your property minus what you owe. For instance, if your home has a market value of $650k and you owe $150k, you have $500k in home equity. If you want to stay in your home but also access the equity you have built up over the years, there are four options to consider. Conventional Mortgage Refinance Assuming you qualify for the mortgage, most lenders will allow you to borrow up to 80% of your property’s value through a conventional refinance. Let’s say your property is worth $500k and you owe $300k on your existing mortgage. If you were to refinance up to 80%, you would qualify to borrow $400k. After paying out your first mortgage of $300k, you’d end up with $100k (minus any fees to break your mortgage) to spend however you like. Even if you paid off your mortgage years ago and own your property with a clear title (no mortgage), you can secure a new mortgage on your property. Reverse Mortgage A reverse mortgage allows Canadian homeowners 55 or older to turn the equity in their home into tax-free cash. There is no income or credit verification; you maintain ownership of your home, and you aren't required to make any mortgage payments. The full amount of the mortgage will become due when you decide to move or sell. Unlike a conventional mortgage refinance, reverse mortgages won’t allow you to borrow up to 80% of your home equity. Rather, you can access a lesser amount of equity depending on your age. The interest rates on a reverse mortgage can be slightly higher than the best rates currently being offered through standard mortgage financing. However, the difference is not outrageous, and this is an option worth considering as the benefits of freeing up cash without mortgage payments provides you with increased flexibility. Home Equity Line of Credit (HELOC) A Home Equity Line of Credit allows you to set up access to the equity you have in your home but only pay interest if you use it. Qualifying for a HELOC may be challenging as lender criteria can be pretty strict. Unlike a conventional mortgage, a HELOC doesn't usually have an amortization, so you're only required to make the interest payments on the amount you've borrowed. Second Position Mortgage If the cost to break your mortgage is really high, but you need access to cash before your existing mortgage renews, consider a second mortgage. A second mortgage typically has a set amount of time in which you have to repay the loan (term) as well as a fixed interest rate. This rate is usually higher than conventional financing. After you have received the loan proceeds, you can spend the money any way you like, but you will need to make regular payments on the second mortgage until it's paid off. If you’re looking for a way to access the equity in your home to free up some cash, please get in touch. You’ve got options, and we can work together to find the best option for you!
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