B.C. is one of the leading provinces in Canada for reverse mortgages, as more British Columbians aged 55+ look to unlock equity from their home, according to HomeEquity Bank.
“Now more than ever, Canadians are viewing their home a central piece of their retirement plan, both to stay in the home they love and also to meet their financial needs. Reverse mortgages allow Canadians to access equity in their home while still owning it, so they can age in place alongside their neighbours in a community they’ve come to love,” said Vivianne Gauci, senior vice-president of customer experience and chief marketing officer at HomeEquity Bank.
According to HomeEquity Bank, there was a 30 per cent increase in reverse mortgages compared to 2021. B.C. and Ontario are the leading markets for Canada, with Gauci saying that 2022 had more new customers than ever before. The bank's portfolio for reverse mortgages reached $6.28 billion in 2022.
A study between Ipsos and HomeEquity Bank showed that 95 per cent of adults, aged 45 and over, say that aging in place would allow them to maintain their independence, comfort and dignity.
Reverse mortgages are an instrument that allows the mortgage holder to surrender equity from their home in exchange for regular payments. Over time, the mortgage balance will increase as the mortgage is — or isn’t — paid down, according to Eitan Pinsky, owner of Pinsky Mortgages.
The one downside to a reverse mortgage, said Pinsky, are the high interest rates. Almost all of the disadvantages to a reverse mortgage stem from this, he said. The high interest rates can be attributed to the benefit of not having to make payments.
Seniors who are paying off debts, experiencing financial pressures or want to improve cash flow can take advantage of a reverse mortgage, said Pinsky.
As more baby boomers retire, the increase in reverse mortgages can be associated with demographics, said Pinsky.
“People might have seen that they've taken on too much debt, and they can't qualify for the amount of debt they already have for consumer proposals or consolidation loans. And the reverse mortgage is a great opportunity for them not to have payments,” he said.
B.C. is a notable market due to its high home values across multiple regions and high percentage of residents above the age of 55, according to Gauci.
In order to qualify for a reverse mortgage, a home must have a value of at least $250,000, be fully insured, in good repair and owned by someone 55+, said Gauci.
“People are living longer, they may not have saved enough, and now inflation has made the cost of everything more expensive,” she said. “Many of our customers recognize the flexibility our products provide so they can choose to take money in a lump-sum or over time, the latter being an option more customers are taking up recently as inflation has increased their monthly expenses.”