The current economic climate is taking a toll on retired Canadians. Rising inflation is making it difficult for those on a fixed income to maintain their standard of living. With increased costs for everything from groceries to electricity bills, three-quarters of Canadians say they are stressed about money and more than 55% say they can’t keep pace with inflation. Those concerns are amplified by the higher costs of aging in place. Although more than 90% of Canadians want to retire in their current homes, they’re facing increasing expenses– including out-of-pocket health care and home retrofitting costs – and rising inflation that is eroding retirement savings making it more difficult to retire in the home they love.
With the annual inflation rate at almost 8% in Canada, interest rates are also trending up. Rising interest rates are leading many Canadian households to devote a significant share of their income to mortgage payments and home equity lines of credit (HELOC) payments. HELOC payments as a proportion of non-mortgage debt grew from 10.5% in January 2000 to 32% by January 2021, according to Statistics Canada. Homeowners are justifiably worried about preserving the equity in their homes.
At times like these, your clients look to you for advice and guidance on how to navigate the uncertain economic climate and generate the cash flow they need to maintain their standard of living.
CHIP Reverse Mortgage: A solution made for today
The CHIP Reverse Mortgage from HomeEquity Bank is a financial solution that meets the needs of your clients. The CHIP Reverse Mortgage is a loan secured against the value of a home that lets clients convert up to 55% of their home equity into tax-free cash – without having to move or sell. Clients can enjoy the convenience of regularly scheduled payouts or take a lump sum to help with any of their needs, including health care costs, home renovations, vacation, or debt consolidation. The choice is theirs. The best part is, the CHIP Reverse Mortgage does not require any monthly mortgage payments until your clients decide to move or sell*.
Your clients also get to stay in the home they love while they wait for the housing market to recover. And thanks to our No Negative Equity Guarantee*, they will never owe more than the fair market value of their property when they move or sell. This is a very important safeguard in today’s economic climate. It ensures that if your client’s home depreciates below the mortgage amount owing, HomeEquity Bank will cover the difference. HomeEquity Bank never lends more than 55% of the home’s value for exactly this reason. Over the past 30+ years, 99% of Reverse Mortgage holders have had equity left in their home, and on average, this equity amounts to 60%.
Financial planning benefits of the CHIP Reverse Mortgage
Having access to tax-free cash flow provides many financial planning benefits to you and your clients.
- Because clients are unlocking home equity, the funds are not added to their taxable income and do not affect income-tested government benefits such as Old Age Security (OAS)
- Tapping into their home equity allows a larger portion of your clients’ registered investments to continue growing on a tax-free basis – providing potentially more assets to leave their heirs
- Preserving client investment portfolios helps you preserve your hard-won client accounts.
- Your clients don’t have to sell investments in a volatile market or borrow funds when interest rates are rising
* As long as you keep your property in good maintenance, pay your property taxes and property insurance and your property is not in default. The guarantee excludes administrative expenses and interest that has accumulated after the due date.