Reverse Mortgage Guide — How CHIP Works in BC

A reverse mortgage lets homeowners 55 and older convert part of their home equity into tax-free cash — without selling, moving, or making monthly mortgage payments.

Instead of you paying the lender each month, the lender pays you. The loan (plus interest) is repaid when you sell the home, move out, or pass away. Until then, you keep living in your home and retain full ownership.

In Canada, reverse mortgages are regulated by the Office of the Superintendent of Financial Institutions (OSFI). The most well-known product is the CHIP Reverse Mortgage from HomeEquity Bank.

The CHIP Reverse Mortgage from HomeEquity Bank accounts for the vast majority of reverse mortgages issued in Canada. Here's how the process works:

1. Application and appraisal — You apply through a mortgage broker. HomeEquity Bank orders an independent appraisal of your property.
2. Approval and amount — Based on your age, property value, and location, you can borrow up to 55% of your home's appraised value.
3. Receive funds — Take the money as a lump sum, scheduled advances, or a combination of both.
4. No monthly payments — Interest accrues on the outstanding balance but no payments are required while you live in the home.
5. Repayment — The loan is repaid when you sell, move to long-term care, or pass away. HomeEquity Bank guarantees you'll never owe more than the fair market value.

Many homeowners wonder whether a reverse mortgage or a HELOC (Home Equity Line of Credit) is the better option. The answer depends on your income and ability to make monthly payments.

Choose a reverse mortgage if: You're 55+, don't qualify for a HELOC based on income, and want to avoid any monthly payments.

Choose a HELOC if: You have sufficient income to make monthly interest payments and want a lower rate with more flexibility. Use my HELOC calculator to see what you could access.

Reverse mortgage rates are higher than conventional mortgages because the lender takes on more risk — there are no monthly payments, and the loan term is uncertain.

Because no monthly payments are made, interest compounds on the outstanding balance. Over 10–15 years, the total cost can be substantial. I always walk clients through the long-term projections before recommending this option.

To qualify for a reverse mortgage in Canada, you need to meet these criteria:

The amount you can borrow depends on your age, your home's appraised value, its location, and the property type. Generally, the older you are and the more valuable your home, the more you can access.

The application process typically takes 2–4 weeks from start to funding:

1. Initial consultation — I review your situation, discuss your goals, and determine if a reverse mortgage is the right fit or if alternatives like a HELOC may serve you better.
2. Application — Submit basic personal and property information. No income documentation is required.
3. Independent legal advice — Canadian law requires that you receive independent legal advice before proceeding. This protects you.
4. Appraisal — A certified appraiser assesses your property's current market value.
5. Approval and funding — Once approved, funds are typically available within a few business days.

A reverse mortgage isn't right for everyone. I always tell clients to consider it carefully and explore all alternatives first.

It may be a good fit if:

• You're 55+ and plan to stay in your home long-term
• You need supplemental retirement income
• You don't qualify for a HELOC based on income
• Leaving maximum inheritance isn't your top priority

Consider alternatives if:

• You have income to support HELOC payments (lower cost)
• You plan to move within 5 years (fees may not be worth it)
• Preserving estate value is important to you
• Refinancing could achieve your goals at a lower rate

As a dual-licensed realtor and mortgage broker in Surrey, I understand home equity from both sides. I can help you evaluate whether a reverse mortgage, HELOC, refinance, or even downsizing is the best path for your financial goals.