As a planner or advisor, you’re used to people like me wittering on about the benefits of reverse mortgages.
Perhaps you fall into the ‘never in a million years’ camp - you wouldn’t recommend a reverse mortgage ever.
In many cases though, the equity in your clients home can represent a larger portion of the clients investment portfolio than the funds they hold so its important to factor this into their plan.
I understand that the distrust of reverse mortgages can be a strongly held position for some but if you’re in the camp that is less certain, here are five benefits that may cause you to reconsider -
1. Tax Free Income
All of the income derived from a reverse mortgage is tax free and won’t interfere with CPP or OAS Benefits.
2. Tied to the clients financial plan
A reverse mortgage can compliment, not hinder the clients existing financial plan. With the right mortgage, you can bridge income to retirement, gift funds to children or grandchildren or have contingency funds available to allow your clients to age in place.
3. Equity can be preserved
Even with a reverse mortgage in place, there is some measure of equity growth to offset the cost. In a real estate market where 5% annual growth is now commonplace, there can be some real opportunity to have a reverse mortgage and preserve equity as well.
4. Age in Place
Perhaps the most important benefit to many clients is the ability to control how they live and allow them to age in place in their own homes.
5. Increased Investment Life
Meaningfully increasing the lifetime of clients investments is perhaps the most important benefit of supplemental reverse mortgage financing. Adding 10 to 15 years to that life not only adds value to the clients lives, it also reduces the annual tax burden.
There are of course, costs associated with the reverse mortgage that can’t be avoided, but by carefully choosing the right one among a growing number of choices, you can seek to minimize these costs.
Give me a call any time if you would like to discuss them further.
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