While Advosys has not conducted a formal survey of its membership to assess customer interest, Pollock acknowledges a reverse mortgage as a financial product that people can consider. As real estate values around Canada climb to an extraordinary level, he says, this creates a lot of room for homeowners to borrow against their home through a reverse mortgage.
“If you use one of these products, there is no impact on your Old Age Security, OAS, or Guaranteed Income Supplemental GIS,” he adds, noting how reverse mortgages are granted to individuals on a tax-exempt basis. allows access to its domestic equity.
But even if the products don’t weigh on retirees’ other income streams, they can still open up some other potential planning pitfalls. Pollock suggests that Canadian retirees with estate plans exercise a level of caution, as taking advantage of their home equity in a reverse mortgage could affect their ability to leave a piece of their assets to their adult children, for example.
“If one needs funds, there are various strategies to ensure cash flow in future. But you have to see the whole picture,” he says.
Recent research from the US suggests that a reverse mortgage can actually help protect against the risks some homeowners face. A study conducted by Finance of America Reverse (FAR), a US retirement solutions company, found that American retirees who are able to tap a reverse mortgage can potentially reduce their exposure to volatility in investment markets, And can increase your net worth. A considerable amount during retirement of 30 years.
