For Millennials, buying a home is a distant dream unless parents help with down payment . . .

 For parents, a reverse mortgage can provide funds            

Young Canadians living in hot housing markets such as Vancouver and Toronto are increasingly looking to their parents for help with down payments when it comes to purchasing their first home.  And, for parents who have seen the value of their homes rise dramatically in the last 10 years, a reverse mortgage is often an attractive way to assist adult children.

That's according to HomEquity Bank experts, who are helping more Canadian seniors set up reverse mortgages so funds may go to adult children needing a down payment on their first home.  

And, financial experts are seeing the same trend of parents helping adult children purchase a first home.

"Ten years ago, this topic rarely came up as most seniors were more concerned with remaining self-sufficient. And, first time homebuyers were purchasing houses on their own. That's changed. Up to 30% of my clients aged 60+ now want to discuss to what degree they can help their adult children financially," explains Rona Birenbaum, financial planner and founder, Caring for Clients.

In fact, it's become such a large part of its service offering that Caring for Clients created a comprehensive, 20-hour assessment program to help clients best determine:

• What is a safe amount to provide to adult children?
• How to be fair and equitable with all children.
• With the amount of money provided, what options are available to adult children? For example, what size mortgage is viable if using funds to purchase a first home?
• How can they protect their money gifted to adult children?

"Most parents want to know that they can protect their money and still lend funds to adult children wanting to purchase a home. By setting up the financial assistance as a zero-interest mortgage, registered on the property, the funds are protected. So, in the event of divorce and the sale of the home, the money goes back to the parents," adds Ms. Birenbaum.

However, if over the long term the marriage does not break down, the parents simply de-register the mortgage and the money is considered a gift, she notes.

"Without help from parents, it's getting to be next to impossible to get into the housing market – especially in Toronto and Vancouver," explains Ms. Birenbaum.

Adds Yvonne Ziomecki, SVP, HomEquity Bank: "The seniors we work with to provide reverse mortgage solutions tell us without financial help, their adult children would be locked out of the housing market.  So, tapping into the equity of their home and providing a down payment becomes an important way to give their children a way to enter the real estate market."

For many first home buyers, condos are a way into the real estate market. The average cost of a condo in Toronto, according to information released in April, 2016 by the Toronto Real Estate Board (TREB) is $393,589. In Vancouver, according to information released in January, 2016 by the Real Estate Board of Greater Vancouver, condos now sell for, on average, $466,600.

HomEquity Bank, the only Canadian bank working exclusively with seniors, provides funds through its CHIP reverse mortgage solution www.chip.ca. Seniors can supplement their income, or tap into the equity of their home, via reverse mortgage monthly or lump sum payments.

About HomEquity Bank

HomEquity Bank is a Schedule 1 Canadian Bank offering the CHIP reverse mortgage solution www.chip.ca.  It was founded 30 years ago as an annuity based solution addressing the financial needs of Canadians who want to access the equity of their top asset – their home.