Cash Strapped Seniors Find Relief
Although free of many obligations of their working lives, many retirees are now worried about not having enough income to keep pace with rising prices for everything from gas to food, never mind indulging in the dream vacations, renovations, and just maintaining their standard of living.
Fortunately, the solution for many seniors with money woes is very close to home; in fact, it IS their home! That’s because after years of watching the value of their homes appreciate, many retirees today have significant equity built up in their homes. Money they can access with a product called a Reverse Mortgage.
Basically, a reverse mortgage is a special type of loan that allows you to borrow against the value of your home. However (and this is a HUGE however), unlike traditional loans, you don’t have to repay the loan for as long as you own and are living in your home. This makes reverse mortgages appealing to seniors on fixed incomes.
In Canada, reverse mortgages are offered by The Canadian Home Income Plan (CHIP). They allow clients over 55 to access up to 50% of their home’s value. Given that there are no medical, income, or credit qualifications, and you don’t have to service or repay the debt until you decide to move or sell your home, CHIP can be a convenient and an affordable way to borrow money.
Although interest on the amount of a CHIP reverse mortgage accumulates over time, so does the home’s entire value. On average, over 50% of the home’s equity remains at the time of repayment. In more active property markets, many clients may have more equity remaining at the time of repayment than the value of their home at the time they took out a reverse mortgage – and they will have had the use of those funds to use in the meantime.
By offering clients access to large amounts of tax-free cash, CHIP Home Income Plan makes it easier to manage day-to-day cash flow. Clients can choose to invest the proceeds to generate a stable, dependable stream of income thanks to the tax-advantaged treatment of interest expense, no ongoing interest payments, and no set repayment date.
In a recent Environics survey commissioned by CHIP,
- 45% of financial advisors said they would recommend a reverse mortgage as an alternative to depleting their clients’ investment portfolios
- 50% of advisors would recommend accessing home equity instead of asking clients to reduce everyday expenses
- More than half were likely to recommend a reverse mortgage over advising their clients to sell their home and downsize.
A CHIP reverse mortgage should be one of the first options considered when planning long-term financial security. After years of working for your house, why not put your home equity to work for you in retirement?
Order your free brochure online by clicking here.
For more information on how a CHIP Home Income Plan may benefit you call 1-866-391-2447.
CHIP Home Income Plan is provided by HomEquity Bank, a Schedule I Canadian Bank. HomEquity Bank is a subsidiary of HOMEQ Corporation, a TSX-listed company.