SPECIAL PROMOTIONAL FEATURE
REVERSE MORTGAGES
The 4 hidden benefits of a reverse mortgage CMP sat down with Sue Pimento from HomeEquity Bank to discuss the key features of reverse mortgages and find out why more clients are using them
DESPITE THE clear benefits they bring – and the financial flexibility they create – reverse mortgages remain the subject of misplaced skepticism. In reality, a reverse mortgage is an effective retirement tool for the majority of homeowners. Canada’s 55+ demographic is growing at a rapid rate; the number of Canadians over age 60 is projected to grow by 19% by 2022. Canadians are living longer than ever before, and traditional retirement planning is no longer meeting the needs and lifestyle of the 55+ demographic. A reverse mortgage is not simply a tool for paying down debt, as some people believe. Many clients use the money they receive to create retirement income, buy a second property, do major renovations, travel or simply stay in the home they love. “There are a lot of misconceptions surrounding reverse mortgages; two of the most common are that people will end up owing more than the property is worth and/or lose ownership of their home, but this is 100% untrue,” says Sue Pimento, VP of referred sales for Eastern Canada at HomeEquity Bank. Here, Pimento highlights four hidden benefits inherent in HomeEquity Bank’s
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reverse mortgages that ensure every client’s equity is kept safe and secure.
1
Your client retains title and ownership of their home – period
While your client’s home is used to secure the loan – and HomeEquity Bank is registered as a standard charge on title – the client does not transfer ownership to the bank. There are also no monthly payments required with a reverse mortgage – once a client is advanced the money, their loan will not be called until they move, sell and no longer live in the home, as long as they maintain the condition of their home and pay their property taxes and insurance. Once approved for a reverse mortgage, a client is approved for life.
2
Lending amounts are conservative
HomeEquity Bank lends up to 55% of the value of the home, while factoring in the homeowner’s age, property type and property location. “The older the client, the higher the loan amount they can qualify for,” Pimento says. “This is done so that the reverse mortgage never exceeds the value of the home.” This fact hasn’t gone unnoticed by a
growing number of Canadian brokers and their clients. HomeEquity Bank, the leading provider of reverse mortgages in the country, reported $767 million in reverse mortgage originations in 2018, marking a 26% yearover-year growth. The demand for reverse mortgages has recently hit an eight-year high as increasing numbers of savvy brokers turn their focus to the 55+ demographic to build and grow their portfolios.
3
Homes typically appreciate in value
The total value of the home is likely to appreciate over time, especially if it is located in a major city. As the property increases in value and the client ages, the client can refinance for more money through a reverse mortgage, which can be used to offset increasing healthcare costs over time. “Based on that differential, even a modest home appreciation allows for equity preservation with a CHIP Reverse Mortgage in place,” Pimento says. “According to the Canadian Real Estate Association’s 10-year national house appreciation average from May 2019, home appreciation is an average of 6%, much higher than the conservative 3% we typically
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16/07/2019 4:01:58 AM