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What’s Behind Canadians’ Growing Appetite for Reverse Mortgages?

Chant says that for 35 years HomeEquity Bank has been helping Canadians age 55 and older achieve their retirement dreams. With the bank’s CHIP reverse mortgage solutions, homeowners are able to access up to 55% of the value of their home in tax-free cash, either as a lump sum or as a regular deposit.

“We look at many different variables to determine the actual amount we can lend to a borrower,” Chant says. “This includes the type of CHIP product they are receiving, the age of the customer, and the home appraisal.”

With housing values ​​rising dramatically during the COVID-19 pandemic, Canadian homeowners have an increased scope to take advantage of reverse mortgages in their financial planning. The pandemic has also exacerbated some of the pre-existing financial strains weighing on Canadian retirees and near-retirees.

“We know that the average retired Canadian has an annual income deficit of about $20,000. We also know that more than 90% of those Canadians want to retire and live their retirement in their own homes,” Chant says. “But access to traditional lending becomes more limited in retirement because retired borrowers are living on a fixed income, and traditional loans can adversely affect their cash flow.”

Unlike traditional debt financing or a home equity line of credit (HELOC), a CHIP reverse mortgage offering is a loan secured against the value of the home that does not require monthly payments. Over the past 10 years, Chant says that the bank has expanded its product diversity to offer better choice and flexibility to the customers.

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