In September FP Canada, the association for Financial Planners and Planning Associates, published the results of a study on why more people don’t tap into Home Equity Release Schemes, i.e. reverse mortgage financing.
Where the clients were financially planned ( 49% of the survey base ), HERS or reverse mortgages were more attractive when recommended by a planner.
It went on to reveal that while the planners surveyed were comfortable with the idea of a reverse mortgage, they tended to recommend selling investments for the extra income needed.
The article went on to recommend ( that planners );
“-Improve their technical knowledge about home equity release products and strategies and effectively educate their clients about available options.
-Remain vigilant against bias impacting their willingness to consider HERS. Bias affects everyone, but planners must be aware of it to ensure their recommendations are appropriate.
-Evaluate strategies rigorously, considering all aspects of any release strategy being considered.”
With respect to improving technical knowledge, complexity has increased because there are now three active lenders in the reverse mortgage space.
Like all mortgages providers, each of these three lenders offers slightly different terms, so its worth talking to an experienced ( or old ) mortgage broker; each of your clients will be better suited to a specific mortgage provider, depending on the time horizon, knowledge and risk tolerance.
If you feel like you want or need to fully understand how a home equity release scheme works and how it might fit into I’m here to help.
