CHIP Home Income Plan Interest Comparison - DIY Borrow and Invest Instead and Save!
CHIP Home Income Plan interest rates are posted in a brochure available to prospective borrows.
Current interest rates and costs vary from 6 month, 5 year and variable borrowing options. Compare the high CHIP variable rate of 4.75% with the ratesupermarket.ca low rate of 2.35% from Mortgage Emporium. On the example for illustration purposes of a $150,000 loan, you could save 2.45% or $3675 a year by borrowing on your own.
How about a 5 year term? CHIP charges you 5.79% interest on your loan vs. 2.99% for a Meridian loan. That's a $4200 savings by borrowing on your own!
Why not borrow against your home equity and invest in a REIT instead of earning nothing from the CHIP loan. Skyline Commercial REIT pays a 9% distribution - that's $13,500 of tax-free income a year from a $150,000 loan and investment. You could use that income to pay off the home equity loan (instead of having it grow and grow as some CHIP customers do), and have income left over!