If you are 55 or older and own a home in Canada, you may have heard about the CHIP Reverse Mortgage. It sounds simple: get tax-free cash from your home without selling it or making monthly payments. But is it really a good deal?
This guide gives you a straight answer. We cover the real pros and cons of a CHIP reverse mortgage, the interest rates you can expect in 2026, and when a different option, like working with a private lender, might serve you better.
A CHIP reverse mortgage has genuine benefits for some homeowners aged 55+. But the higher interest rates and long-term costs mean it is not the right fit for everyone. Read on to see if it makes sense for you.
What Is a CHIP Reverse Mortgage?
CHIP stands for Canadian Home Income Plan. It is a product offered by HomeEquity Bank — the largest and oldest reverse mortgage provider in Canada, with over 30 years of experience.
Here is how it works in plain terms:
• You must be 55 or older and own your home.
• You can borrow up to 55% of your home’s appraised value.
• The money comes to you tax-free as a lump sum or in scheduled advances.
• You do not make any monthly payments.
• The loan is paid back when you sell the home, move out, or pass away.
Because you keep the title and ownership of your home the whole time, the CHIP reverse mortgage is often marketed as a way to stay in your home and still access the equity you have built up over the years.
To understand how this fits with other options, read our guide on how a reverse mortgage works in Canada.
CHIP Reverse Mortgage Pros and Cons at a Glance
Here is a side-by-side summary before we go into the details:
| The Pros of a CHIP Reverse Mortgage | The Cons of a CHIP Reverse Mortgage |
| No monthly mortgage payments required | Interest rates are higher than conventional mortgages (7.24%–7.59% in 2026) |
| Tax-free cash — does not affect OAS or GIS | Interest compounds over time, reducing your home equity |
| You keep full ownership and title of your home | Up-front fees: appraisal (~$500), legal advice (~$550), closing costs |
| Access up to 55% of your home’s value | Early exit penalties if you break before the term ends |
| Negative equity guarantee — you never owe more than the home is worth | Reduces the inheritance you leave behind |
| Flexible payout options: lump sum or scheduled advances | You must maintain the property and keep taxes and insurance current |
| No income or credit score requirements to qualify | Not available to homeowners under age 55 |
What Are the Interest Rates on a CHIP Reverse Mortgage in 2026?
As of March 2026, the CHIP reverse mortgage interest rates from HomeEquity Bank are:
| Term | CHIP Rate (2026) | APR |
| 5-Year Fixed | 7.24% | 7.68% |
| 3-Year Fixed | ~7.39% | ~7.84% |
| 1-Year Fixed | 7.59% | 8.04% |
| Variable | HomeEquity Bank Prime + spread | Varies |
Source: NerdWallet Canada, March 2026. Rates are subject to change.
The CHIP reverse mortgage interest rate is available in two main formats:
• Fixed rate: Locked in for 6 months, 1 year, 3 years, or 5 years. Most people choose a 5-year fixed for predictability.
• Variable rate: Based on HomeEquity Bank’s prime rate plus a fixed spread. It can move up or down if the Bank of Canada changes its rate.
For comparison, Equitable Bank (the only other major reverse mortgage provider in Canada) currently offers rates starting around 6.54% on a 5-year fixed term — slightly lower than CHIP. It is worth comparing both before you decide.
Also see our overview of reverse mortgage pros and cons for a broader comparison.
Who Is a CHIP Reverse Mortgage Right For?
A CHIP reverse mortgage may make sense if:
• You are 55 or older and plan to stay in your home long-term
• You are house-rich and cash-poor — you have built up equity but have limited monthly income
• You want to avoid the stress of monthly payments
• You do not plan to leave the full home value to your heirs
• You need money for healthcare, renovations, or to pay off debt
It is probably not the right choice if:
• You may need to move within a few years
• Leaving a full inheritance is a priority
• You can qualify for a HELOC, home equity loan, or private mortgage at a lower rate
If you have bad credit or low income, read about home equity loans with bad credit to see what other doors may be open to you.
Alternatives to a CHIP Reverse Mortgage
Before you commit to a CHIP reverse mortgage, it is worth knowing your other choices:
Home Equity Loan
A home equity loan lets you borrow against your home with fixed monthly payments and usually a lower rate than a reverse mortgage. If you can handle the payments, you will keep more equity in the long run.
HELOC
A HELOC vs home equity loan comparison may surprise you. A Home Equity Line of Credit often has lower interest rates and lets you borrow as needed. But you do need income and good credit to qualify.
Second Mortgage
A second mortgage can give you access to equity with more flexibility in terms. Private lenders in BC often offer second mortgages with faster approvals and less strict income requirements.
Downsizing
If your goal is simply to free up cash in retirement, selling and moving to a smaller home may give you more money with less cost than a reverse mortgage. It is not for everyone, but it is worth considering.
Not Sure a CHIP Reverse Mortgage Is Right for You?
Talk to Seven Lending — We Find the Right Fit for You
At Seven Lending, we understand that a CHIP reverse mortgage is not the answer for every homeowner. That is why we offer a wider range of solutions from private mortgages and home equity loans to second mortgages and debt consolidation, all tailored to your specific situation.
Our team specializes in helping Canadians across BC, including homeowners with bad credit, low income, or non-traditional employment, access the equity they have worked hard to build. We take the time to compare options and find the solution that costs you the least and gives you the most.
Ready to explore your options? Apply now at Seven Lending or book a free appointment with one of our mortgage specialists today.
Frequently Asked Questions
What is the interest rate on a CHIP reverse mortgage?
As of March 2026, CHIP reverse mortgage interest rates range from 7.24% (5-year fixed, 7.68% APR) to 7.59% (1-year fixed, 8.04% APR). Variable rate options are also available and are tied to HomeEquity Bank’s prime rate.
Are CHIP reverse mortgage rates higher than regular mortgages?
Yes. CHIP reverse mortgage rates are typically 1% to 2% higher than standard mortgage rates. This is because the lender takes on more risk — there are no monthly payments, and they must wait years to be repaid.
Can you lose your home with a CHIP reverse mortgage?
Not simply from the loan balance growing. However, if you stop paying your property taxes, cancel your home insurance, or let the property fall into disrepair, the lender can trigger early repayment. As long as you meet these basic obligations, you can stay in your home.
What happens to the CHIP reverse mortgage when you die?
Your estate has up to 180 days to repay the loan. This is usually done by selling the home. If there is equity left after the loan is repaid, that goes to your heirs.
Is there a better alternative to the CHIP reverse mortgage?
For some homeowners, yes. A private mortgage or home equity loan in BC may offer lower rates and more flexibility. If you can manage small monthly payments, these options often result in keeping more of your home’s value over time.
Final Thoughts
The CHIP reverse mortgage is a legitimate product. For the right homeowner, someone who is older, plans to stay in their home, and needs cash without monthly obligations, it can work well. The negative equity guarantee and tax-free income are real benefits.
But it is not cheap. The interest rates are higher than those of other home equity products, and the compounding effect over many years can quietly eat away at your equity. Before signing up, it is worth getting a second opinion from a mortgage professional who can show you all your options side by side.
Seven Lending is here to do exactly that. We help homeowners in BC, including those in Vancouver,Surrey,Kelowna, and beyond, find the mortgage solution that actually works for them.
Contact Seven Lending today and let us help you make the right decision for your home and your future.
About the Author
This article was written by the mortgage specialists at Seven Lending, a BC-based private mortgage brokerage with deep expertise in home equity solutions, reverse mortgages, and alternative financing for Canadian homeowners. Our team works with borrowers across British Columbia to find the right fit, regardless of their credit history or income situation.
Learn more about us