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The incredible versatility of a reverse mortgage

By Jim Gordon and Leeta Liepins
Published 11:26 PST, Fri January 17, 2025
Last Updated: 10:51 PST, Mon January 20, 2025
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Our City Tonight sat down with senior mortgage broker, Jolene George, who is with the Vine Group Mortgage Brokerage to talk about information for the Senior citizens.
OCT: We see a lot of commercials on television featuring various celebrities talking about something called “Reverse Mortgage”. We wanted to sit down with an expert and find out more information and sort of uncover the mystery of this topic on behalf of Seniors. In addition, another topic we want to talk to you about is the change in the bank rates that have recently dropped. As a senior mortgage broker, and being knowledgeable in this field, we wanted to ask you to explain some of these terms and what it means for people who want to buy a home or for people who already own a home.
JG: The Bank of Canada had a recent rate drop and what that really means is it’s applicants or clients with a variable rate mortgage or anyone that has a variable term home equity line of credit or a line of credit will have an advantage. So, most banks have brought the prime in November to 5.95 per cent. And what that means for a consumer is that you would see about a decrease of $40 per month on every hundred thousand dollars borrowed.
OCT: The main topic that we’re discussing is reverse mortgages and as we mentioned, we see commercials about this all the time. Can you please explain what this is and how it works.
JG: A reverse mortgage is a product designed specifically for Canadians 55 plus. This is a payment-flexible loan meaning that payments are not required.
OCT: That’s an important and key point that payments are not required and because it’s a flexible loan you do not need to make payments.
JG: There is the option under the flexible loan program that if you would like to, you certainly can make payments. This product allows homeowners to have that lifestyle that they had and enjoyed before retirement. Most often OAS and CPP are not granting the same livelihood as when they were working.
OCT: It is interesting that you made a point of saying these mortgages are designed exclusively for Canadians because we were talking earlier off camera about the American housing market collapse in 2008 and how regulations here are stricter here.
JG: This mortgage product is available in other countries. In fact, it’s very successful in the UK and Australia as well. Our reverse mortgage offered by Home Equity Bank and Equitable Bank is for Canadians so only available for residents.
OCT: Let’s talk about that person that comes to you and is over 55 or over 65 and they are looking for advice on a reverse mortgage. What are the downsides of reverse mortgages?
JG: In my view there really is no downside. I believe there’s a lot of hype given to what happened in the USA in 2008. The USA regulations are not quite like what we do here in Canada. We cap the loan out at 57 per cent loan to value so the loan is guaranteed that it would never exceed the value of the home especially here in British Columbia. Here in the lower mainland, the home generally is appreciating even on a more rapid scale than the interest that’s occurring.
OCT: Can we discuss some examples of the people that you have helped over the years. You have two very different examples in terms of this scenario.
JG: I just worked with one gentleman, and he was a retiree. He was single and had no children to pass on the generational wealth to. I put a reverse mortgage together for him and his home came in around $2.5 million. A home that he had purchased in Vancouver many, many years ago at the price of $300,000. We put together a reverse mortgage that granted him $600,000 and with this he built a laneway home, and this created passive income for him. Another example would be parents that are using this product to release equity from their home so that they can give an early inheritance to their children particularly if they are first-time buyers and are finding it difficult to get into the housing market due to the high pricing of homes.
OCT: So, this is a way to help their kids or the grandkids. Give us an example of someone who’s just having trouble getting by financially.
JG: I helped a gentleman who purchased a home worth $1.8 million and it was mortgage free, and he had clear title. He is receiving OAS and CPP and he has no children to pass the estate onto. So, he decided to use the equity in his home as a payment plan. CHIP stands for Canadian Home Income Plan and you can opt to pay yourself monthly. This money would be directed into your account, and you’d be paying yourself from the equity of your home. This helped him maintain his livelihood after retirement.
OCT: If our viewers want to receive more information on this topic and more about the services available, they can go to vinegroup.ca
JG: Or they can speak directly to me and my advice would be to definitely meet with a mortgage professional. The first step really is to sit down with a mortgage professional and the process is quite simple as there basically is no income qualification required for this loan. I just need the postal code and the age of the applicant to start the application. I don’t even need an applicant’s full name at this point to let you know what you have access to with just those two criteria.
To watch the interview in full go to richmondsentinel.ca/videos