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Ross Hooker

Ross Hooker



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Be the Better Borrower - Reverse Mortgages. Let's be Clear!

6/3/2022

Reverse Mortgage. There, I said it. Almost feels like there’s an elephant in the room now, doesn’t it?

In my opinion, no other mortgage product seems to garner more negative feedback, or has a greater negative stigma, than that of a Reverse Mortgage. Bring it up with friends or family and it’s often met with ‘oh, those are bad” or “can’t you lose your home with one of those?” Just Googling the term “Reverse Mortgage” can yield a list of people’s previous negative searches indicating the general dislike or misunderstanding of what I believe to be a very good product… in the right situation. In fact, just now I typed “Reverse Mortgage” into my Google search bar and “Reverse Mortgage Horror Stories” comes up in the list of options I’m given to complete my search!

It’s too bad really, but perhaps understandable as there likely were a few horror stories that the media chose to sensationalize in the early days of reverse mortgages which made it easy to conclude that these types of mortgages perhaps were indeed and forever bad. However, fast forward to today and we now have a product that has evolved, especially in Canada, with protective features and safeguards that many of us conservative and polite Canadians might expect!

While it’s clear of course that reverse mortgages are not for everyone, what can’t be overlooked is that there is a very real and growing segment of the population today that is retired (or about to retire), that is on a fixed income, and that perhaps has not managed to save enough for retirement or have some sort of pension plan in place. And these good folks, while perhaps not the best of prepared for retirement, like many “boomers” they are potentially healthier and more active than previous generations, they would prefer to age in their current home, and they could benefit from tax free access to the equity in that home.

Reverse mortgages are on the rise in Canada and in my opinion, this is a clear indication of the need for the product as well as its market relevance. In the UK, the product is called an Equity Release Mortgage (a term I personally prefer to that of Reverse Mortgage) and there they have a penetration rate of 5:1 compared to Canada (on per capita basis), which is a further indication of the strong relevance of this product in another arguably sophisticated market.

If you, or someone that you know, would like to explore the options with respect to a Reverse Mortgage, I‘d be happy to help. And full disclaimer, I don’t treat this product lightly and as something to necessarily rush into. I believe in exploring all options and likely even engaging a financial adviser to ensure it is the best plan/option for my clients.

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