For many retirees, their home represents their largest financial asset. Accessing their home equity while maintaining homeownership can be a challenge, especially for those with existing mortgages. Traditional lenders often have rigid qualification criteria, making it difficult for seniors with fixed incomes to refinance or tap into their home’s value. This is where a Tembo mortgage paired with a CHIP reverse mortgage can help. This financial solution allows homeowners aged 55 and older to maximize their home equity by combining a CHIP reverse mortgage with a private mortgage to replace and pay out their existing bank mortgage. The result? Lower monthly payments, improved cash flow, and no ongoing payments on the CHIP portion of the loan. In this blog, we’ll break down how this unique financing strategy works, its benefits, and how it can be a game-changer for seniors looking to free up their home equity without the burden of traditional mortgage payments.

How It Works:

1. You own a home in Toronto worth $1.6 million.
2. You have an existing mortgage of $825,000 with a big bank.(52% LTV)
3. You apply for a CHIP reverse mortgage and are approved for $575,000. (36% LTV)
4. However, your existing mortgage exceeds CHIP’s approved amount, meaning you must pay out the big bank to qualify for CHIP.

Here’s where Tembo Financial steps in:

1. We will provide you with a mortgage.
2. You use your Tembo mortgage to pay off the existing big bank mortgage and help secure the CHIP approval.
3. The CHIP mortgage has no required monthly payments, freeing you up cash flow.
4. Your new payments on the private mortgage are thus lower than what you were previously paying to the big bank. (Usually principal + Interest payments)

Why This Solution Works for Seniors

For many retirees, traditional refinancing is not an option. Banks require income verification, high credit scores, and debt servicing ratios that may not be feasible for individuals living on pensions or investments. A Tembo 2^nd mortgage behind CHIP offers a more flexible alternative by leveraging the equity in the home rather than focusing on income.

1. Eliminates Traditional Mortgage Payments

One of the biggest advantages of this structure is that it eliminates large 1st mortgage payments by securing the CHIP loan portion, freeing up significant monthly cash flow. Unlike a standard mortgage or home equity line of credit (HELOC), which require monthly payments, a CHIP mortgage allows homeowners to stay in their home without the financial burden of ongoing payments.

2. Increases Financial Flexibility

Retirement often comes with unexpected expenses—healthcare, home maintenance, travel, or helping family members. By unlocking equity through a CHIP reverse mortgage and a private loan, homeowners gain access to substantial funds without disrupting their lifestyle or losing their homes.

3. Allows for Higher Loan Amounts Than CHIP Alone

CHIP’s loan-to-value ratio maxes out at 55%, meaning some homeowners with existing mortgages cannot fully pay off their current lender using CHIP alone. The private mortgage from Tembo acts as a supplemental financing tool, making CHIP approval possible.

4. No Impact on Homeownership

Unlike selling the home or taking on a traditional second mortgage, this strategy allows retirees to remain in their homes indefinitely while benefiting from their home’s equity. The CHIP mortgage does not require repayment until the homeowner sells the home or passes away, providing long-term stability. By making lower principal and interest payments to Tembo, you slowly pay down the private mortgage with the ability to pay it off in full over time*.

5. Works for Those with Credit or Income Challenges

Since CHIP focuses on home equity rather than income, retirees who might not qualify for a traditional mortgage due to low income or credit challenges can still access substantial funds. Tembo Financial also provides a more flexible approval criteria than banks.

This Tembo lending structure is ideal for:

•  Retirees who need additional funds but want to stay in their home
•  Homeowners with high mortgage balances who cannot qualify for a CHIP outright
•  Seniors looking to reduce their monthly expenses by eliminating traditional mortgage payments
•  Individuals on fixed incomes who have trouble qualifying for traditional refinancing

Whether you need funds for retirement expenses, home renovations, debt consolidation, or simply want peace of mind, this strategy can offer a powerful financial solution.

Final Thoughts: A Smart Way to Access Home Equity in Retirement

For Ontario homeowners over the age of 55, a CHIP reverse mortgage paired with a 2^nd private mortgage from Tembo Financial is a strategic way to access home equity while maintaining homeownership and reducing monthly expenses. By replacing a traditional mortgage with a CHIP reverse mortgage and adding a private mortgage, retirees can enjoy the benefits of home equity without the burden of large monthly payments.

Interested in Learning More?

If you’d like to explore whether this financing option is right for you, give Tembo Financial a call today at 1-844-238-6717! Our expert team can walk you through your options, run the numbers, and help you determine the best strategy for your specific situation. We can approve you same day and provide funds quickly . Your home is your greatest asset—call Tembo today!

*Subject to Qualification

* Every situation is unique and requires an assessment by Tembo Financial. Not all examples  outlined here directly relate to each homeowner situation. Results may vary