These clients often own their home without title or have minimal mortgage balances.
For some reason, they are now looking to take some of that equity out of their homes. Some of the common reasons why these clients seek to refinance include:
- Helping their children with a down payment for a house
- Buying a second home, such as a winter vacation home or rental property
- Consolidate debts to improve cash flow
- Raise money to take advantage of investment opportunities
- The purchase of another asset such as a new vehicle
Under mortgage rules, despite having significant equity and a history of responsible credit management, these clients sometimes have difficulty getting approved for a mortgage.
The good news is that there are several great options available.
For clients over the age of 55, several companies in Canada offer reverse mortgages. Reverse mortgages have gotten a bad rap because of what has happened in the US reverse mortgage market. In Canada, they are highly regulated to protect consumers.
People have mixed opinions on reverse mortgages. I admit that I myself had a negative opinion. However, after helping many seniors stay at home or regain positive cash flow to enjoy retirement, I am convinced that there is a time and place for reverse mortgages.
For clients who are not over 55 or who are not interested in reverse mortgages, there are several lenders who offer mortgages specifically for clients with high net worth who do not qualify under the standard mortgage rules.
The very short version is that these mortgage products take into account the percentage of your home’s equity and your cash balance (i.e. your investment portfolio).
One of the things I discuss with my clients who are in their mid-forties refinancing or buying a home is offering them credit for later when they need it. In my experience, it’s much easier to qualify for credit while you’re still working and don’t need it, compared to waiting until you’re retired and an emergency arises.
If you find yourself in this situation, we will be happy to discuss some of your options.