There are many misconceptions surrounding
reverse mortgages. Since the most common misconceptions center around interest
rates, here are some “interest-ing” facts to help educate your clients:
Interest rates are only slightly higher than a home equity line of credit.
For those having trouble qualifying for a line of credit through a financial institution, this difference in rates can become negligible. Income requirements are often a barrier when seeking approval for a HELOC – since the CHIP Reverse Mortgage is specifically designed with retired Canadians in mind, qualifying is much easier.
Interest rates on credit cards are significantly higher.
Not only do these products charge significantly higher interest rates, but regular payments on principal and interest are required. With a CHIP Reverse Mortgage, no monthly mortgage or interest payments are required – payment is only due when the clients no longer live in their home.
Interest is compounded. While the interest is compounded semi-annually, HomeEquity Bank also provides homeowners with the option to make interest payments to help keep interest from accruing.
Compounded interest will mean owing more than the home’s value when the loan is due. This is not true. The CHIP Reverse Mortgage has a no negative equity guarantee. Should the loan amount exceed the property sale amount, HomeEquity Bank covers the difference between the sale price and the loan amount.