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Published: October 20th, 2015 • Last Updated: January 6th, 2021
Author: Ross Taylor on AskRoss.ca
Reverse Mortgages: A way for seniors to gift money to loved ones
According to HomEquity Bank almost 5% of their clients aged 55 and over arrange reverse mortgages as a way to gift money to their adult children.
“What we hear from some of our clients is that they want to see their loved ones enjoying the results of their hard work. And so they arrange reverse mortgages and gift money to their adult children. And, since we have no gift tax in Canada, it’s hugely beneficial,” notes Yvonne Ziomecki, SVP, HomEquity Bank.
What are some examples of when a reverse mortgage would work?
Some recent examples of ‘giving with warm hands’, as arranged by HomEquity Bank, include:
- An 84-year old Ontario widow gifted her daughter, living abroad, $350,000. The daughter is experiencing tough times due to divorce and her mother provided an early inheritance to help at a time when it is most needed.
- A couple living in British Columbia gifted $600,000 to each of their two sons, allowing them to buy their first homes.
- A 78-year-old Ontario widower is gifting $100,000 to his two adult children to help with their mortgages.
- A Vancouver couple arranged a $325,000 reverse mortgage and allocated: $100,000 for a son going through a divorce; $100,000 for a son looking to grow his prosperous business; and $100,000 for a son with a struggling business. The remaining $25,000 was allocated to a family trip.
“More Canadian seniors are looking to a reverse mortgage as a way to help their adult children when they need it most. They have decided they don’t want their children to wait – they want to see them enjoy the money,” adds Ms. Ziomecki.
How does the CHIP reverse mortgage work?
Visit the CHIP Calculator to determine the amount of money available, which is based on the homeowners’ age and the location and type of home as well as the home’s current appraised value.
Access money as a one-time lump sum, as monthly payments or both – it’s tailored to individual needs.
Up to 55% of the home’s value can be accessed and the money is tax free. Unlike a traditional loan, no payments are necessary until it’s time to move or sell the home.
To find out if a reverse mortgage makes sense for you or someone you love, please call Ross at 416.989.1050 or email [email protected]
About HomEquity Bank
HomEquity Bank is a Schedule 1 Canadian Bank offering reverse mortgages. The company was founded 28 years ago as an annuity based solution addressing the financial needs of Canadians who want to access the equity of their top asset – their home.