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Help your clients tap into tax-free cashflow to boost their retirement income

May 1, 2023 | Last updated on October 11, 2023
2 min read
Aged couple drinking coffee meeting with sales manager around a kitchen table
istock/ Viacheslav Yakobchuk

As inflation reduces the value of savings and financial markets continue to experience volatility, it can be challenging for retired Canadians to access the cashflow they need to live their desired lifestyle. And while the good news is that Canadians are living longer than ever before – those who retire at 65 can expect to live an additional 20 years or longer when you factor in advances in health care – these financial challenges they may face may start to tarnish their golden years.

Traditional sources of retirement income

A combination of registered savings, government, and company pensions are typically relied upon by Canadians for retirement income. If an individual begins collecting government pensions (such as Old Age Security and Canada Pension Plan) at age 65, they may currently receive less than $2,000 per month. Additionally, four in 10 Canadians do not have company pension plans to fall back on, and recent figures show that the average amount saved in registered plans for those aged 55-64 is about $100,000. As a result, some clients approaching or already in retirement may experience an income deficit, particularly with today’s inflation rate of 6%. 

Access home equity with a reverse mortgage

One advantage older Canadians do possess is home ownership, with more than 65% owning their homes. That’s why the CHIP Reverse Mortgage by HomeEquity Bank has become such an essential cashflow option. This unique income alternative allows Canadian homeowners 55+ to access up to 55% of their home’s value and turn it into tax-free cash without moving or selling their home. Plus, there are no monthly mortgage payments while retirees live in their homes; the total amount becomes due only when the house is sold, if they move, or through their estate if they pass away.

With the CHIP Reverse Mortgage, homeowners can choose to receive the funds as a lump sum or in regular monthly deposits. They can use the funds for a range of financial needs, including, but not limited to, health care costs, home renovations, debt consolidation, or lifestyle expenses.

Advantages of tax-free retirement income

Having access to tax-free cashflow provides many financial planning benefits to your clients.

  • Because they are unlocking home equity, the funds are not added to their taxable income and do not affect government benefits such as Old Age Security (OAS)
  • Your clients won’t need to liquidate their investments, potentially losing out on investment income during a down market
  • Tapping into their home equity allows more of your clients’ registered investments to grow tax-free (and helps you maintain hard-won client portfolios)

Help your clients take a holistic look at their retirement income options with the CHIP Reverse Mortgage by HomeEquity Bank. Visit us online or contact a Business Development Manager to learn how to make CHIP part of your financial toolkit.

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