For clients looking to tap into their home equity, the only thing holding them back on reverse mortgages is a lack of information, and the fear that generates.
As more seniors look to this type of financing to help their adult children as well as finance their retirement, brokers can clear up these misconceptions.
“More Canadian seniors are looking to a reverse mortgage as a way to supplement their retirement income. For many, it helps them to remain in their homes as they age,” says HomEquity Bank SVP of marketing & sales, Yvonne Ziomecki. “When it comes to finances, we want to educate Canadians on their options, and clear up misconceptions around the reverse mortgage.”
Ziomecki shared with MPA these Top 10 Facts That Will Make You Change Your Mind on Reverse Mortgages to help brokers clear up any misgivings that clients may have:
1) Once you are approved for a reverse mortgage, you are approved for life;
2) You can qualify for a reverse mortgage regardless of your credit rating or income level;
3) You will still have equity left in your home. Even after arranging a reverse mortgage, in most cases, HomEquity Bank clients have an average of 50% of the equity left in their homes;
4) You can’t sign final documents without first receiving Independent Legal Advice. That means all Canadian seniors must receive independent counsel before a reverse mortgage can be arranged;
5) Arranging a reverse mortgage is not complicated. Some seniors have described arranging a CHIP reverse mortgage as “the simplest financial transaction ever arranged;”
6) Reverse mortgage rates are as low as Prime plus 1.25%;
7) Money is of course tax free, and can help you lower your overall tax liability;
8) If one spouse dies, there are no changes to the terms of the reverse mortgage. The loan does not have to be repaid and you don’t have to requalify;
9) Reverse mortgages provide you with an opportunity to diversify your retirement portfolio; and
10) We have different rules in Canada when it comes to reverse mortgages, so don’t look to U.S. sources for information.
