More and more Canadian seniors tend to rely on home equity in terms of financing retirement

According to the latest study, almost 8 in 10 Canadians over the age of 55 can’t rely only on available registered savings and pension plans when it comes to providing a comfortable retirement.

The recent Ipsos poll conducted for HomeEquity Bank shows that about half of respondents consider home equity to be an extremely important part of retirement planning, although many don’t want to downsize from their current property.

Canadian seniors who don’t want to sell their home in order to get access to finances may choose reverse mortgages or HELOCs as the most likely resources of equity access during their retirement.

That’s the reason why HomeEquity Bank, using a sloid network of certified mortgage brokers, offers their credit products which could help older Canadians who don’t want to sell and downsize, while 76% of them feel a strong pressure to do it.

“Today, downsizing isn’t as attractive as it was in the past,” – noted HomeEquity Bank President and CEO Steven Ranson. “With all the risks associated with moving and searching for another suitable home, more than a quarter of senior homeowners are thinking about using the equity in their homes instead of selling to support themselves during retirement.”

Another study by the National Institute on Aging shows almost the same results, with 9 out of 10 respondents saying they want to stay in their homes as long as possible.

If we look at the average income Canadian seniors can expect to have in retirement, it’s not difficult to understand why more and more of them are considering home equity to be their life saver.

In Canada, seniors receive income during the retirement through three main sources:

• Canadian Pension Plan (CPP) with the average amount for a 65-year-old reaching $736.58 in January 2021.
• Old Age Security (OAS) with the average amount, according to the Government of Canada, reaching $618.45.
• Retirement Savings Withdrawals (RRSP), with a BMO report saying the average RRSP balance for Baby Boomers (57-75 years old) was $178,664.

As a result, we have about $2,100 per month.

Sharply growing home values have been a true gift for seniors who are thinking about getting a reverse mortgage, leading to a significant product popularity growth.

“The demand for the Bank’s reverse mortgages went up rapidly supported by low interest rates, record high home prices and a strong desire to age at home. This trend is expected to continue, as the Canadian market is underserved so far compared to international markets,” – noted HomeEquity Bank in its report.