Thinking of working with reverse mortgages? Here’s how to do it
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Reverse mortgages are an excellent way for brokers to carve out a niche, but finding clients isn’t always easy.
According to Darlene Vilas, a mortgage broker with MOS MortgageOne Solutions, there are a few places brokers can look should they be inclined to specialize in that facet of the business.
“Because a lot of brokers tend to network with realtors, I let realtors know that their clients can use reverse mortgage financing to purchase a home,” said Vilas, who’s specialized in reverse mortgages for over a decade. “It’s especially effective when someone is downsizing and, say they don’t necessarily want to put down their full proceeds on the next house, they let CHIP or Equitable Bank put down a part of the down payment to keep more money in their own pocket.
“The second way is through my database. I let most of my middle-aged clients know that there are options for their parents, and that there are options for them, too. We’ll strategize together and I’ll put them in a term whereby, at renewal, the next step is heading towards a reverse mortgage.”
One reason more and more Canadians are open to such an idea is because there have never been so many people retiring with an existing mortgage.
“If you’re retiring with a mortgage, the likelihood of paying that mortgage back is very, very, very slim,” said Vilas. “I don’t even think it’s possible. I ask them, ‘Wouldn’t you rather, in your early retirement years, have the benefit of your cash flow knowing you don’t have a mortgage to pay?’”
Equitable Bank and CHIP Reverse Mortgages are excellent, added Vilas, for paying off remaining mortgage balances.
“If someone owes $300,000 on their house and they only qualify for $200,000, then no,” she said. “But if they ow $150,000 and CHIP qualifies them for $200,000, they can have CHIP pay it off. CHIP only goes to maximum 55%. If the existing mortgage isn’t being completely paid off by CHIP, it won’t work.”
There are other ways brokers can spread word that they work with reverse mortgages. In addition to speaking with existing clients, brokers can also speak to financial planners, accountants, lawyers, book keepers—anyone who works with seniors.
“They would be mindful of letting clients know about your services,” said Vilas, adding brokers can also hold seminars.
“You can either do a seminar with a realtor or some of your other referral sources. You’d have to be well-versed in the topic. People will be willing to hear about it if you can answer all their questions and give them a rundown of how it works. I’ve gotten referrals that way.”
