Currently many families are facing a financially challenging time. In fact, many Canadians 55+ are looking for a solution that can enable them to provide financial support to their loved ones whose employment and income have been impacted by COVID-19.

You need money, but withdrawing from retirement savings or selling assets to generate cash to provide financial support to family members, may not be the best solution, and can lead to the following challenges:

  • Tax implications, which may include withdrawal and capital gains taxes
  • Potential to impact government benefits (e.g. OAS claw back)
  • May impact future retirement income

A reverse mortgage can help you unlock up to 55% of the equity from your home while increasing your monthly cash-flow, tax-free. It is a long-term solution that can help Canadians 55+ access funds to support family members. A Reverse Mortgage provides the following benefits:

  • The ultimate deferral plan: no regular (monthly) payments required
  • No Negative Equity Guarantee*: Clients never owe more than the value of their home.
  • The Reverse Mortgage funds are tax-free and do not affect CPP, OAS or income tax brackets.
  • Clients have the flexibility to withdraw funds in a lump sum or in monthly/annual installments.

In a monthly or yearly installment program, the borrower can request funds 30 days in advance or have a regular “income” stream set up. The interest is only calculated when the instalments are made. Interest payment is optional. If not paid it will simply add to the principal without penalties.

Note this is not a “taxable income” so it will supplement your monthly or yearly cash flow without affecting taxes, CPP, OAS or income brackets.

Many people use reverse mortgage as a part of their retirement plan. It is a useful strategy to

  • Stretch how long your savings will last you, without compromising your lifestyle
  • Plan your retirement budget to optimize withdrawals from RRIF, annuities and pensions so that it will NOT deny you the government benefits you are entitled to.
  • Facilitate a tax efficient transfer of wealth
  • Leave a living legacy or early inheritances
  • Use the regular cashflow to set up insurance policies for children and grandchildren such as Head Start 

If you would like more information about how we can help support you during this difficult time or the tools or services we are making available to you, please contact me today.

*As long as the client meets their mortgage obligations, the Banks guarantees that the amount they will have to pay on their due date will not exceed the fair market value of their home.

Learn more by clicking here to watch a short video.