Ongoing economic uncertainty driving force behind Canadians 55+ leveraging equity to support adult children
This article was produced in partnership with HomeEquity Bank
HomeEquity Bank’s suite of reverse mortgage products helps Canadians 55+ live the retirement of their dreams. Whether they’re practical - renovations, clearing existing debts, or the opportunity to age in place - or more adventurous - travelling, hosting friends or dining out - there’s a reverse mortgage product to make those dreams come true. But an increasingly common reason why a client may need the flexibility of a reverse mortgage is to help those closest to their home and their heart - their family.
The situation
Katrina Liu was proud when her daughter Michelle bought her first home last year; happy her child achieved one of life’s adulthood milestones. However, when the COVID-19 pandemic struck, Michelle’s job was impacted. Because of her sudden unemployment, her mortgage provider was unable to provide many options to help her situation.
Though Liu wanted to support her daughter financially during her time of need, her options were also limited. Single and in her late 60s, Liu didn’t qualify for traditional financing because of her income. Thinking only of her daughter’s hardship, Liu considered drawing from her investment portfolio or dipping into her monthly cash flow to help.
Read next: Learn the basics of what a reverse mortgage is
Unfortunately, the plight of Liu’s daughter and the stress Liu felt as a result is not an uncommon situation. In a time of ongoing uncertainty due to the ebbs and flows of the pandemic, there are an increasing number of older Canadians worrying about the financial wellbeing of their adult children whose livelihoods are being negatively impacted.
The solution
Fortunately, there was an option available to Liu that enabled her to help her daughter without cashing in investments or impacting her monthly income in any way: HomeEquity Bank’s CHIP Reverse Mortgage.
Liu’s house was valued at $945,000 and she was able to access up to 55% of that equity in tax-free cash. Liu decided to gift her daughter $150,000 as an early inheritance, enabling Michelle to pay her mortgage and support herself while looking for a new job. Between mortgage payments of $1,900 and other expenses of $1,700, Michelle needed a total of $3,600 per month to get by. The lump sum from her mother meant a savings cushion large enough to cover three-and-a-half years of expenses.
Though keeping her financial situation intact month-to-month was an important outcome for Liu, she’s mainly relieved she was able to help her daughter in her time of need.
“Knowing that my daughter can continue paying her mortgage while she looks for a job has given me huge peace of mind,” Liu said.
Are you prepared to help the next Ms. Liu?
Being able to offer clients 55+ options when they’re faced with life’s challenges is a critical component for brokers looking to provide a full-service experience. If you’re interested in learning more about how to provide a holistic suite of solutions to your clients at every age and every stage, reach out to a HomeEquity BDM today.
HomeEquity Bank has been dedicated to providing Canadian homeowners 55+ with smart and simple solutions for enjoying the retirement they deserve - in the home they love, for over 35 years. It understands helping your clients is your top priority, and HomeEquity Bank is here to help make that happen with a range of products including CHIP Reverse Mortgage, CHIP Max, CHIP Open and Income Advantage.
