Discover new opportunities to help clients with the CHIP Reverse Mortgage

Why enter a reverse mortgage?

The core reason usually relates to cashflow if your income in retirement is lower or you need money for a specific purpose. Given the client’s age, conventional financing is out of the question, so borrowing money tax-free makes sense. With the CHIP Reverse Mortgage, clients can take equity out of their home and then invest it in some fashion – be that in topping up investment accounts to generate additional income (or avoiding taxable events) or making a real estate purchase, for example.

Debt consolidation is another usage, especially given the rise in interest rates, while helping kids get on the property ladder or, sadly, dealing with the fallout from a grey divorce where one spouse wants to buy out the other’s half of the property is another growing issue.

How should advisors present this opportunity?

For advisors, Thorsteinson believes the key is to bring in a HomeEquity Bank CHIP Reverse Mortgage expert to inform and educate clients. Then it’s about storytelling – and the company has several case studies highlighting various financial planning needs.

Anecdotally, he recalled a story of a couple who downsized to rent, only to regret it as house prices soared. Their home sold for $395,000 is now worth close to $2 million, and the couple is in a rental situation, feeling less settled and having missed out on a significant sum.

“They’ve lost that appreciation and value,” Thorsteinson said. “Had they done a reverse mortgage, sure, the interest would have added up, and the total owed would probably have gone up to maybe $700,000, but the value of the house would be a million-plus more. They’ve lost out on that. People don’t always think about what a house might be worth. They just think I have X amount of equity today, and it will get eaten up, as though the price of the home will never appreciate.”