25% of CHIP reverse mortgage originations have come from brokers this year, according to HomEquity Bank.
Last year it was only 15%.
There are at least five reasons behind this surge in broker referrals. Among them:
- Change: CHIP’s product has noticeably improved in the last few years—in both pricing and flexibility. In turn, the public seems to have a growing acceptance of, and need for, reverse mortgages. (Total originations grew 18% last quarter.) Being highly entrepreneurial by nature, brokers excel at educating consumers about new and revamped mortgage products.
- Ease: More brokers are discovering how easy it is to refer clients to CHIP. (It’s a simple referral form.) CHIP manages almost everything, including the application, approval and closing.
- Recent Promotions: CHIP is doing a better job of promoting its lower eligibility age (55) and higher loan-to-value maximum (50%).
- Competition: Some brokers are undoubtedly shifting some business to alternative products as traditional “A” lending gets more competitive.
- BDM Support: CHIP’s business development managers (BDMs) are incentivized and widely supportive of brokers.
Sidebar: Reverse mortgages are not meant to be an ideal product for the masses. CHIP is, however, a saviour for those with no better options—and that includes a growing percentage of cash-strapped seniors.
Rob McLister, CMT
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Last modified: December 24, 2021
Hi Rob,
Great post. Great site.
Do you have any information on interest rates for reverse mortgages and / or how they are calculated?
Cheers.
Thanks Appraiser.
This should help:
http://www.chipadvisor.ca/site/chipadvisor_ca/assets/pdf/fact_sheet.pdf
Rob,
I wrote this awhile ago on million dollar journey on annuities.
http://www.milliondollarjourney.com/how-annuities-work.htm
Back to Back Annuity (insured annuity)
This example compares GIC vs a life annuity with a matching life insurance policy.
Example:
•Current GIC rate 3.25% (five year rate lock-in)
•65 year old male purchases $100,000 non-reg annuity and $100,000 life insurance policy
•Tax bracket 31.41% ($40,970 up to $65,345) Ontario
Insured annuity GIC
Gross income $8,165 $3,250
Taxes payable $742.90 $1,012.37
Life insurance $3,240 $0
Total net $4,182 $2,237.63
This a payout for life. If one can get equity out of their house why not have it guaranteed without fees?
What is the advantage of this over a cheaper and more flexible HELOC?
With CHIP there is
No proof of income required.
No credit check required.
No payments required.
No chance that a lender will call in your HELOC leaving you high and dry.
No taxes on the cash you receive.
No chance you’ll get kicked out of your home for not paying your HELOC or mortgage.
CHIPro,
I think the key here is once the money is distributed to the client what next?
Chip is requires:
“All that’s required is that you maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.”
The reason one came to Chip in the first place is cash flow. That is why the insured annuity route maybe the only safe way to go, or…sell the house.
Since we know property taxes, inflation, insurance, maintenance only goes up over time and markets are risky without planning (not the ideas suggested on their web site).
One is really giving up control of their biggest asset (your home) to a corporation, you have to do your homework. The idea that real estate only goes up (as the graphs suggest on the website, is wrong).
They down show what happens if real estate falls by 20-50% or more.
CHIP gives seniors the option of receiving cash flow monthly instead of taking one big lump sum. The homeowner only pays interest on the actual funds borrowed.
Are you suggesting seniors are better off taking a big lump sum, paying interest on the whole amount and investing the proceeds in an annuity?