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Everything you wanted to know about reverse mortgages (but were afraid to ask)

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Thanks to everyone who attended the Reverse Mortgage 101 webinar on May 18th! For those who couldn't attend, we have created this slide share. We welcome you to share the presentation with your network.

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Everything you wanted to know about reverse mortgages (but were afraid to ask)

  1. 1. Everything You Wanted to Know About Reverse Mortgages (But were Afraid to Ask…)
  2. 2. 2© 2015 HomEquity Bank. All rights reserved. Everything You Wanted to Know About Reverse Mortgages (But were Afraid to Ask…) Myths debunked Uses and client types HomEquity Bank’s products How someone qualifies Questions What is Reverse Mortgage What makes the product Unique 1 2 3 4 5 6 AgendaAbout HomEquity Bank Over 30 years in business The only provider of reverse mortgages in CanadaA Schedule 1 Bank since 2009 Consistent double-digit yearly originations growth
  3. 3. 3© 2015 HomEquity Bank. All rights reserved. What Is a Reverse Mortgage? So what is a Reverse Mortgage… Very simply a Reverse Mortgage is a lifetime loan secured against the value of a client’s home with no mortgage payments required1. Clients can convert part of their home equity into cash, tax- free. Clients will not owe more than the value of their home and are only asked to repay the loan when they vacate their home2. It is available to mature Canadians age 55 and older. Clients maintain complete ownership and control of their home. 1. Clients are required to pay property taxes and home insurance, and keep property in good condition. 2. Provided the client has paid property taxes and home insurance, and has kept the property in good condition.
  4. 4. 4© 2015 HomEquity Bank. All rights reserved. What Makes The Reverse Mortgage Unique? For these reasons and more, a reverse mortgage can empower older Canadians to live a better retirement. Regular mortgage payments are not required until clients no longer live in the home Provided the mortgage is in good standing, clients will never be forced to move or sell Proceeds are tax-free Ability to unlock up to 55% of their home value into cash Clients can confidently expect to still have equity in their home if they ever decide to sell $ $
  5. 5. 5© 2015 HomEquity Bank. All rights reserved. Myths Debunked FACTS A reverse mortgage is a lifetime product, and as long as property taxes and home insurance are in good standing, the property remains in good condition, and the homeowner is living in the home, the loan would not be called if the house decreases in value. Reverse mortgages provide peace-of- mind that the homeowner can stay in their home as long as they’d like. The bank can force the homeowner to sell or can foreclose at any time. The homeowner always maintains title ownership and control of their home, and they have the freedom to decide when and if they’d like to move or sell. The bank owns the home HomEquity Bank’s conservative lending practices allow clients to take a maximum of 55% (33% on average) of the home’s appraised value. In fact, over 99% of clients have equity remaining in the home when the loan is repaid. Borrowers with a reverse mortgage will owe more than their house is worth MYTHS
  6. 6. 6© 2015 HomEquity Bank. All rights reserved. Why Do People Use A Reverse Mortgage? I need to pay for an unplanned expense “ ” I need to alleviate the stress of debt “ ” I want to improve my lifestyle“ ” I need to maintain my standard of living “ ” Mortgage payments Credit Card Bills Car Payments Leaky Roof Flood Home Renovation Vacations Summer Home Entertainment Monthly Income Supplement Augment Pension Income
  7. 7. 7© 2015 HomEquity Bank. All rights reserved. Product Options I need to pay for an unplanned expense “ ” I need to alleviate the stress of debt “ ” I want to improve my lifestyle“ ” I need to maintain my standard of living “ ”
  8. 8. 8© 2015 HomEquity Bank. All rights reserved. CHIP Reverse Mortgage $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Thousands Thousands Year • Because clients can take the full value of the mortgage up front and they generally qualify for more under CHIP, it is ideal for clients who want to pay down debt or have large unplanned expenses. • Below is an illustration of how the CHIP Reverse Mortgage works for a $500,000 home and an initial advance of $195,000. Home Equity ($336,000) Interest ($246,000) Initial Advance ($195,000) Home Equity ($305,000) Home price appreciation assumed to be 3% annually Interest rate: 5.49% For illustration purposes only. External factors not accounted for in the calculations may affect future projections. This information is not intended as specific financial, accounting, legal, or tax advice.
  9. 9. 9© 2015 HomEquity Bank. All rights reserved. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Thousands Thousands Year Income Advantage • Because clients can schedule advances monthly or quarterly, Income Advantage is ideal for clients who want to improve their lifestyle with additional income • Below is an illustration of how Income Advantage works for the same $500,000 home and the same total mortgage amount of $195,000 (initial advance of $15,000 and planned advances of $1,000 / month for 15 years) • Interest builds up more slowly because the principal is advanced over time rather than all up front Home Equity ($484,000) Interest ($99,000) Initial Advance + Planned Advances ($195,000) Home price appreciation assumed to be 3% annually Initial advance interest rate: 4.99% Planned advance interest rate: 4.45% Home Equity ($485,000) For illustration purposes only. External factors not accounted for in the calculations may affect future projections. This information is not intended as specific financial, accounting, legal, or tax advice.
  10. 10. 10© 2015 HomEquity Bank. All rights reserved. An Example of How Someone Qualifies – CHIP $500,000 house (with an appraisal) Detached home in a major Canadian city Client qualifies for $195,000 - a loan to value (LTV) of 39% ($195,000 / $500,000) Client decides, of the $195,000, how much do they want now (initial advance) or later (subsequent advances) Age of the client(s) and home value are the main drivers of the qualifying amount. Marital status and gender also contribute to the quote amount. The minimum property value we will lend on is $100,000 The location and type of home matters – apartment, detached, urban, rural, etc. The maximum loan to value for a CHIP reverse mortgage is 55% For CHIP, the minimum initial advance is $25,000. The maximum is the total qualifying amount. Couple Age 72 Age 68
  11. 11. 11© 2015 HomEquity Bank. All rights reserved. Summary Recap For More Information… • With HomEquity Bank reverse mortgages, clients can confidently expect to have equity left in their homes when they vacate the home • Flexible options to receive proceeds can appeal to different types of client • No mortgage payments are required and the proceeds are tax-free 1. Speak to your Business Development Manager (BDM). To find your BDM, go to www.chipadvisor.ca/bdm. 2. Visit www.chipadvisor.ca 3. Attend our future planned webinars (we’ll let you know when they’re available for sign-up): • Grow Your Business with Canada's Fastest Growing Demographic • Your Grandma's on Facebook: Digital Trends and the Senior Market • Thinking Outside the Box: Creative Ways to Use Reverse Mortgages
  12. 12. 12© 2015 HomEquity Bank. All rights reserved. Appendix
  13. 13. 13© 2015 HomEquity Bank. All rights reserved. To Find Out How Much Your Client Could Qualify For https://www.chipadvisor.ca/calculator/
  14. 14. 14© 2015 HomEquity Bank. All rights reserved. Rates & Fees (as of May 15, 2017) For current rate information, please visit https://www.chipadvisor.ca/rates/

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