FRANÇAIS
CONTACT US: marketingrequests@heb.ca

May 21 , 2021  /   Mortgage Trends

Appreciation Over Downsizing: Older Canadian Homeowners Hold the Keys to Growing Your Business

Canada’s record-setting housing market is currently one of the hottest topics of conversation and there’s no doubt many of your clients are feeling the heat to sell. In fact, according to new data from our latest Ipsos-commissioned study, 76% of older Canadians believe homeowners in their demographic are sometimes pressured to downsize. While the allure of cashing in on soaring prices may seem like a quick win, it’s not as simple as it sounds.

With limited housing supply, aggressive bidding wars and the fact that the cost of condos by square foot in major markets is as much as detached homes, it may not be worth the risk to sell and move.

For homeowners banking on using their sale proceeds to help fund retirement, downsizing could end up costing them more — or worse, like what happened to this Toronto woman who sold her house and ended up getting priced right out of the market.

If your clients are concerned about their retirement savings and are thinking about downsizing to help pay for their golden years, the following are some leading considerations, backed by research, that show they may want to think twice before making a move.

Older Canadians see the value in accessing their home’s equity

According to data from our latest Ipsos-commissioned study, 79% of older Canadians say they can’t bank on Registered Retirement Savings Plans (RRSPs), the Canada Pension Plan (CPP) and Old Age Security (OAS) for a comfortable retirement. Only 5.9 million Canadians contributed to their RRSPs in 2019, with the median contribution $3,260[1], so this doesn’t bode well for retirement finances.

It shouldn’t come as any surprise, then, that 45% of older homeowners say accessing the equity in one’s home without having to sell should be a key component of retirement planning. This is important because we’re now seeing a shift in how this demographic views reverse mortgages. They’re beginning to regard them as a proactive solution to their long-term financial goals rather than a reactive lending option when they need income and feel they have no other choice.

Lastly, 77% of boomers are homeowners[2], so they’re likely looking to their largest investment to supplement their retirement income — and our data shows over a quarter of them are open to using their home’s equity instead of downsizing.

Vast majority of older Canadians don’t want to move but need solutions to pay for it

According to another survey we conducted, 93% of Canadians 55 and up have made it clear they want to age in place at home. When you’re talking to clients who are adamant they don’t want to move, but are worried about their financial ability to stay put, it’s important to reassure them they’re not alone and there are options available.

When we polled Canadians 55 and up back in March, three quarters of respondents said they’re concerned about their financial well-being due to the pandemic. Additionally, a survey by Edward Jones Canada found 59% of Canadians in this demographic have no concept of the health and long-term care costs they should be saving for in retirement.[3]

With more than half of Canadians 55 and older now considering in-home care, their ability to pay for it could be challenging based on the numbers above.

Products like the CHIP Reverse Mortgage, Income Advantage, CHIP Open, and CHIP Max are designed specifically to address these challenges. and already, 22% of this demographic say they’d leverage their home’s equity to help cover the costs of in-home care.

Why the CHIP Reverse Mortgage is the right solution for our current situation

The pandemic has completely transformed the way Canadians view home ownership. So has the red-hot real estate market that’s defied most analysts’ expectations and conventional wisdom.

What happens next is anyone’s guess. But in times of uncertainty and volatility, older Canadians want a safe and secure bet to help fund their retirement. The CHIP Reverse Mortgage is an ideal solution for those not willing to risk downsizing and losing the home they love.

[1] https://www150.statcan.gc.ca/n1/daily-quotidien/210309/dq210309c-eng.htm

[2]https://www.newswire.ca/news-releases/more-than-14-million-boomers-across-canada-expect-to-buy-a-home-in-the-next-five-years-690334391.html

[3]https://www.investmentexecutive.com/news/research-and-markets/most-canadians-arent-planning-for-long-term-care-costs-survey/

  • Posted by
  • On May 21 , 2021
  • 0 Comments
  • 0 likes
Stay Informed!  
Get the latest news & valuable content sent right to your inbox.


Your information is protected, and we will only use it to send marketing communications and special offers. It will not be shared with third parties.

Related Articles

Summing it up: Takeaways from the 2022 Canadian Mortgage Summit
December 01 , 2022   /   Mortgage Trends

Summing it up: Takeaways from the 2022 Canadian Mortgage Summit

HomeEquity Bank was invited to participate in the recent Canadian Mortgage Summit held by Canadian Mortgage Professional (CMP) – a well-known publication that delivers mortgage industry news, information, and resources. Alongside a bustling Expo Hall that allowed attendees to connect with mortgage lenders, industry peers, tech companies, and more, the one-day event brought experts and leaders from across the country to discuss topics that matter most to those in the industry. Here, we’re highlighting some of our most memorable insights and takeaways from the speakers, including the Lenders Panel (a look ahead to 2023) that Vivianne Gauci, HomeEquity Bank’s Senior Vice President, Customer Experience, and Chief Marketing Officer, spoke on.   The future looks bright Although some believe that the Bank of Canada’s interest rates will go up again next month, there is light at the end of the tunnel. Many speakers agreed that by the end of 2023, rates will begin to come down. Brokers should continue to nurture relationships, find ways to provide value to their clients and source new avenues to grow their businesses. If rates decline, as some predict, and more Canadians are ready to begin the home-buying process, you will be prepared for the influx of new business.   Communication can help keep business flowing While business typically slows down the mortgage industry towards the end of the year, it’s a great time to reach out to clients. During the Lenders Panel, Vivianne Gauci shared three tips (and one bonus tip!) for keeping the conversation going and staying top of mind with clients: Check in on your clients. At HomeEquity Bank, we make “warm hug” calls to check in with customers and let them know we’re thinking of them. Now isn’t the time to sell; it’s simply a touch-base to keep the lines of communication with clients open. These calls can be especially meaningful for clients who do not have a regular social or support network. Mine your database. You likely have a robust contact list you’ve been building for years. Make use of your downtime and reach out. You may be surprised to learn about potential deals or referrals you wouldn’t have otherwise known about if you hadn’t picked up the phone. Get social. In times of uncertainty, people look to sources of authority to help with decision-making. They also tend to buy from those they know, like, and trust. Show your personality and expertise on your preferred social media channels. You will not only reach new potential audiences, but you’ll also start to stand out as a leader and authority in the mortgage space. Bonus: Ask, “How are your parents doing?”. This simple question could open up a conversation about your clients’ parents’ situation and a potential new lead.   Technology will continue to play an important role The Internet of Things may have helped to modernize the financial services industry, but it was the COVID-19 pandemic that catapulted the mortgage industry into embracing technology, from adding more robust mobile capabilities to enabling digital signatures to a more efficient funding and adjudication process. In the face of the pandemic, older Canadians have become more tech-savvy. An Environics Research poll conducted in July 2020 showed that 65% of Canadians aged 65 and older own a smartphone, a 7% jump from 2019. The poll also showed that video calling doubled, 19% of Canadians 65+ do online shopping for essentials, and 72% say they feel “confident” using current technology. With more and more Canadians making technology a part of their day-to-day living, financial services companies continue to invest heavily in technology. With the introduction of better automation, brokers can leverage technology to help streamline their business processes, allowing them to focus on other areas, such as business development and marketing.   Regulations keep everyone safe Although one speaker believed regulatory requirements should ease up a bit, most agreed that rigorous guidelines benefit everyone involved in the home-buying process. As a Schedule 1 Bank, HomeEquity Bank follows and adheres to all regulatory guidelines, and we firmly believe it helps us all. Guidelines help protect home buyers, and we feel it allows mortgage brokers and lenders to elevate their games. At HomeEquity Bank, we value our referral partner relationships, so we work hard to offer the tools, resources, and support you need to nurture and grow your business, especially during uncertain economic times. Subscribe to our Broker Launchpad, our exclusive broker portal that has what you need to promote your business and educate your clients. And when you’re ready, search for a BDM near you to learn how the CHIP Reverse Mortgage from HomeEquity Bank can be an ideal solution for your 55+ clients.
How to help your clients consolidate debt and boost their income in retirement
December 14 , 2021   /   Mortgage Trends

How to help your clients consolidate debt and boost their income in retirement

Have your clients underestimated how much they’ll need to fund their retirement? Although it’s hard to put an exact figure on how much each individual will need, according to Scotiabank, many financial planners recommend having $1 million saved by the time you stop working. According to the Scotiabank Retirement Survey, however, the average Canadian expects to need $697,000 – a number considerably lower than that recommended by experts. Regardless most Canadians currently in retirement or soon to enter have a shortfall in the cash flow they require to support their retirement lifestyle. Statistics Canada reveals a $20,000 shortfall between average annual expenses of $60,000 versus an average yearly income of $40,000. Further, the Broadbent Institute reports that 47% of Canadians between 55 and 64 don’t have an employer pension. More Canadians are also entering retirement in debt Many of your clients will also be entering retirement carrying debt. According to StatCan, 42% of families headed by someone 65+ are in this position -- 13.9% are paying off a mortgage, and 37.4% are carrying consumer debt. Paying off debt can be difficult for retired Canadians on a reduced income, especially when there are other expenses associated with aging. Healthcare expenses – such as home modifications, nursing care, and mobility devices – can be a particular source of concern for older Canadians. According to the Sun Life Health Index, just a third of adults are saving for a health emergency. How you can help While your clients’ debt-to-income ratio may not be ideal, their debt-to-asset ratio is probably far more healthy. 75% of Canadians 65+ are homeowners, and since real estate prices have risen nonstop since 2002, their homes represent a considerable source of wealth. You can help them access this wealth using Income Advantage from HomeEquity Bank. Income Advantage is a reverse mortgage that helps your clients access up to 55% of their home’s value in tax-free cash. Funds are provided as a lump sum of at least $20,000, followed by regularly scheduled advances of $1,000 per month or $3,000 per quarter at a minimum. This structure makes it ideal for consolidating existing debt and then boosting your clients’ cash flow going forward. And since no repayment is required until your clients leave their homes or pass away, they’ll have even more money available to enjoy their retirement. The funds received through Income Advantage are 100% tax-free, so they won’t affect your clients’ marginal tax rate or trigger OAS or CPP clawbacks. What’s more, since the program allows your clients to boost their monthly cash flow while keeping their investment portfolios intact and growing, they’ll have more set aside to cover healthcare expenses, make home renovations or even give an early inheritance to their children. Finally, with Income Advantage, your clients can rest assured that they’ll maintain full ownership and control over their homes. And thanks to our No Negative Equity Guarantee, they’ll never owe more than the fair market value of their property. If you’d like to find out more about how Income Advantage from HomeEquity Bank can help your clients live their retirement on their terms your Business Development Manager would be happy to provide you with more information. If you don’t have a BDM follow the link below to find one. Find a BDM >
Helping Clients Help Family Members
July 21 , 2021   /   Mortgage Trends

Helping Clients Help Family Members

How to help your clients help family members It’s widely accepted that millennials are financially worse off than their parents, an assumption which is, unfortunately, borne out by the facts. According to StatCan, despite earning an average of $90,047 at the median age of 31, which is 18.27% more than gen X at the same age, millennials are materially worse off. They pay on average 22.24% more tax than gen X at the same age and an eye-watering 31.91% more on housing. And that’s not all, millennials have on average $26,475 in savings, a good start but not nearly enough for the down payment on a home. The bank of mom and dad It’s not surprising, therefore, that older Canadians are helping out their adult children more than ever. According to a survey by RBC, an astounding 90% of parents provide financial support to their adult children, with expenses including education costs (69%), living expenses (65%), and cell phone bills (58%). According to a survey commissioned by FP Canada, contributing to the down payment on their child’s first home is also common, with 40% of parents doing or intending to do this. Although most parents surveyed say they’re happy to help their adult children financially, 30% say they’re worried about the impact it could have on their retirement savings, and another 3 in 10 say they’re concerned they’ll have to delay retirement. The CHIP Reverse Mortgage If your 55+ clients want to access cash to help their adult children or another family member without jeopardizing their retirement plans, the CHIP Reverse Mortgage can help. The CHIP Reverse Mortgage allows your clients to access up to 55% of the value of their home in tax-free cash. Once they’ve paid off any other loans tied to the home, they can spend the money on whatever they want – whether that’s helping out a loved one or doing something for themselves, like making renovations or simply covering monthly outgoings. What’s more, since they don’t have to repay anything until they move out or pass away, there are no monthly repayments eating into their retirement income. The CHIP Reverse Mortgage allows your clients to access cash without dipping into retirement investments and savings, so they can help their loved ones while maintaining their financial security. And since the cash received is tax-free, proceeds won’t affect your client’s marginal tax rate or trigger taxes or OAS/CPP clawback. A concern that sometimes comes up surrounding reverse mortgages is whether there’ll be any equity left in the home when it’s time to sell. And the answer, the vast majority of the time, is yes. The high cost of housing is the reason why many millennials still rely on their parents for financial support, however, by using the CHIP Reverse Mortgage, your clients will be able to turn Canada’s red-hot housing market to their children’s advantage. To learn more, click here to speak to a BDM today.