CHIP Reverse Mortgage Review 2025
Bremo verdict: CHIP is Canada's most established reverse mortgage product and the safest option for eligible seniors needing income from home equity. However, the rates are considerably higher than HELOCs or standard mortgages. Best for retirees who cannot qualify for a HELOC and want to stay in their home.
CHIP at a Glance
Provider: HomeEquity Bank
Min. Age: 55
Max. Loan: Up to 55% of home value
Monthly Payments: None required
Rate Type: Fixed or variable
No Negative Equity: Yes (guaranteed)
What Is the CHIP Reverse Mortgage?
CHIP (Canadian Home Income Plan) is offered by HomeEquity Bank, Canada's only federally regulated lender specializing exclusively in reverse mortgages. HomeEquity Bank has been operating since 1986 and holds the vast majority of Canada's reverse mortgage market share.
CHIP allows homeowners aged 55+ to borrow against their home equity without making any monthly payments. The loan balance accumulates interest and is repaid when the home is sold or the borrower moves out permanently.
CHIP Rates in 2025
| Rate Type | Approximate Rate |
|---|
| 6-month fixed | 6.49%–7.49% |
| 1-year fixed | 6.69%–7.69% |
| 3-year fixed | 7.29%–8.29% |
| 5-year fixed | 7.49%–8.49% |
| Variable rate | Prime + 2.0%–3.0% |
Rates vary by age, location, and LTV. Contact HomeEquity Bank directly for a personalized quote.
CHIP Fees and Costs
| Fee | Amount |
|---|
| Appraisal fee | $300–$500 |
| Independent legal advice (required) | $300–$600 |
| Closing/administration fee | ~$1,795 |
| Title insurance | ~$200–$400 |
| Prepayment penalty (if broken early) | 3 months interest or IRD |
Eligibility Requirements
- All homeowners on title must be 55 or older
- Property must be your primary residence
- Eligible property types: detached, semi-detached, townhouse, condo (with conditions)
- Minimum home value: approximately $150,000
- Must be in a qualifying area (primarily urban and suburban Canada)
- No income or credit score requirements — qualification is primarily equity-based
CHIP Pros and Cons
Pros
- No monthly payments required — ideal for fixed-income retirees
- Tax-free funds — not considered income by CRA
- No negative equity guarantee — you can never owe more than the home is worth
- You retain title and ownership throughout
- Flexible disbursement — lump sum, scheduled advances, or a combination
- Does not affect CPP, OAS, or GIS benefits
- Simple qualification — no income test or minimum credit score
Cons
- High interest rates compared to HELOCs and standard mortgages
- Compounding interest significantly erodes equity over time
- Reduces inheritance for heirs
- Higher closing costs than standard mortgages
- Prepayment penalties can be substantial if you want to exit early
- Limited to primary residences — investment properties don't qualify
How CHIP Compares to a HELOC
| Feature | CHIP Reverse Mortgage | HELOC |
|---|
| Monthly payments | None | Minimum interest |
| Rate | 6.5%–9% | ~5.45% |
| Age requirement | 55+ | None |
| Income required | No | Yes |
| Credit score | Not required | 650+ required |
| Max borrowing | Up to 55% of value | Up to 65% of value |
Who Should Consider CHIP?
- Retirees on fixed income who can't afford HELOC payments
- Seniors who don't qualify for a HELOC due to insufficient income
- Homeowners who want to stay in their home for 5+ more years
- Those who want to supplement CPP/OAS without selling their home
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Frequently Asked Questions
Is CHIP the only reverse mortgage in Canada?
CHIP is the largest and most established, but Equitable Bank (PATH Home Plan) and Bloom Finance also offer reverse mortgages in Canada. Competition has increased in recent years, putting slight downward pressure on rates.
Can my children inherit the home with a CHIP reverse mortgage?
Yes — your estate has up to a certain period (typically 6 months) after you pass away to repay the CHIP loan, often from sale proceeds. Heirs can also choose to pay off the loan and keep the home.
What is the independent legal advice requirement?
CHIP requires all borrowers to obtain independent legal advice (ILA) from a lawyer who is not connected to HomeEquity Bank. This protects seniors from being pressured into the product and is mandatory for all CHIP closings.