A reverse mortgage boosts clients without depleting investment accounts
This article was produced in partnership with HomeEquity Bank.
In March, Canada hit a grim milestone: the annual rate of inflation hit 6.7%, the fastest year-over-year increase in the consumer price index in over three decades. More than half of Canadians responding to an Angus Reid Institute survey say they can’t keep up with the sky-rocketing cost-of-living. From food, to gas, to credit card payments, your clients’ household budgets are being squeezed from all angles and there’s an increasing need to supplement cash flow to cover monthly expenses – but HomeEquity Bank’s suite of reverse mortgage options can offer a solution.
Unanticipated expenses
According to the same Angus Reid Institute survey, 51% of respondents said they would be unable to cover an unexpected $1,000 expense and one-in-seven reported they couldn’t manage a surprise bill of any amount because their budget is already too stretched.
These days, savings may not be what they once were and while unexpected expenses are a fact of life, extra costs during a time of rising inflation can present an even greater challenge. As we’ve seen with the events of the past few years it’s difficult to predict what may happen, but you can make a difference – and offer clients peace of mind – by educating them about reverse mortgage options.
The big picture
Faced with rising costs and stagnant income, retired clients may be tempted to withdraw funds from investment accounts. But that opens them up to tax implications and erodes their savings in the long term. According to Scotiabank, investing in a balanced portfolio, containing a mix of stocks and bonds, has a greater potential to outpace inflation and help build wealth over time – but in reality, people need access to funds now to manage their day-to-day expenses.
That’s where the CHIP Reverse Mortgage comes out on top as the savvier solution: borrowing money from the equity in their home saves clients from depleting investment accounts and prevents the possibility of OAS claw backs. Especially in their Golden Years, this is a critical consideration for clients 55+.
The CHIP Reverse Mortgage advantage
Reverse mortgages are becoming more mainstream in financial planning conversations for Canadian seniors, and the current economic environment is highlighting the savviness of this approach. The good news is inflation drives up the value of real assets, such as a home, but your client can’t pay the electricity bill or grocery shop with their depleting cashflow – unless you help them unlock the equity in their home.
During a challenging time, a reverse mortgage product helps alleviate some of the pressures of the current economic environment by providing that much-needed additional cash flow. With the CHIP Reverse Mortgage by HomeEquity Bank, Canadians 55+ can access up to 55% of the equity in their home tax free, and there are no monthly payments required. For those who prefer to receive monthly or quarterly advances, the Income Advantage product is a great option to counteract the rising cost of goods and services.
Backed by over 35+ years in the reverse mortgage business, HomeEquity Bank remains the leading provider of reverse mortgages in Canada and is a federally regulated Schedule 1 Bank. HomeEquity Bank is also the only financial institution in Canada that solely services the Canadian 55+ demographic, putting them as a market leader in this space.
But act now…
As per a May survey by the Conference Board of Canada, 78% of Canadians anticipate inflation will surpass the Bank of Canada’s objective of 2% during the next three years, up from 77% in April. As rates continue to rise there’s much to be said for getting in early: while variable rates fluctuate with changes in economic conditions, HomeEquity Bank offers a stable five-year term that locks your client in at today’s rate, protecting them from future jumps. Holding out and accessing money at a later date will likely cost more – securing that increase in cash flow now is their best bet given the current landscape.
To learn more about HomeEquity Bank’s reverse mortgage products and how they can help relieve some of the pain points your 55+ clients are grappling with, contact a 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.
