New rates transform the financial solutions landscape for seniors
TORONTO, Nov. 9 /CNW/ - HomEquity Bank (Banque HomEquity), Canada's newest chartered bank, today announced that it is has significantly reduced its variable rate on CHIP Home Income Plans to 3.75%*, signalling a transformative change in the acceptance of reverse mortgages as a viable tool within the financial solutions landscape. The significantly lower cost of borrowing gives today's cost-conscious seniors more flexibility in how their home equity can be used to enhance their retirement lifestyles.
"Canada's seniors market is the fastest growing segment of the population and we have a proven track record of providing innovative solutions to meet seniors' financial needs," said Greg Bandler, Senior Vice President, HomEquity Bank. "Our dramatically lower rate of 3.75% builds on our commitment of putting stable long-term borrowing within the reach of Canadian seniors."
A reverse mortgage is designed for Canadian homeowners 60+ who wish to tap into the equity built up in their homes. The new 3.75% rate positions CHIP Home Income Plan as an attractive long-term home equity based borrowing solution. Customers will find it less expensive to create additional cash flow to supplement monthly income. Seniors can preserve existing assets by using CHIP funds to avoid RRIF withdrawals above the annual minimum or the sale of non-registered investments. They can also choose a reverse mortgage to discharge existing debts to increase monthly cash flow.
HomEquity Bank also offers a discount program that further reduces the interest rate on a CHIP Home Income Plan to as low as 3.25%* to customers who pay their full interest annually.
These significantly lower rates are made possible by HomEquity Bank's debut last month as Canada's newest chartered bank. In becoming a Schedule I Bank, the company has gained immediate access to retail deposits sourced through deposit brokers, both diversifying its sources of funding and lowering the cost of borrowing.
"Becoming a Schedule I Bank has allowed us to lower our rates because we now raise funding the same way that other banks do," explained Mr. Bandler. "We are thrilled to be in the position to offer such a compelling financial solution and look forward to servicing the growing demand in this key market segment. The true beneficiaries are Canadian seniors, who now have a low-cost, stable, long-term borrowing solution giving them peace of mind that their home equity will be there for them whenever they need it."
*See Annual Percentage Rate section for further information
Annual Percentage Rate
The interest rates compound semi-annually. Based on a CHIP Home Income Plan of $150,000 and the rate of 3.75%, the Annual Percentage Rate (APR), which is calculated as the rate of interest plus closing costs, is 3.86% over 10 years, 3.96% over 5 years, and 4.78% over 1 year. When full annual interest is paid, the rate is decreased by 50 bps to 3.25% and the APR is 3.36% over 10 years, 3.46% over 5 years, and 4.27% over 1 year. Most clients benefit from their CHIP Home Income Plan over a number of years.
Forward Looking Statements
From time to time, HOMEQ Corporation and its wholly-owned subsidiary, HomEquity Bank, make written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including the likelihood of HOMEQ's success in developing and expanding its business. These may be included in HOMEQ's or its predecessor's Annual Reports, regulatory filings, reports to shareholders, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of HOMEQ and HomEquity Bank. Actual results may differ materially from those expressed or implied by such forward-looking statements. HOMEQ and HomEquity Bank do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.
About HomEquity Bank
HomEquity Bank is a Schedule I Canadian Bank and a wholly-owned subsidiary of HOMEQ Corporation. HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ. HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 60 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand.
As of September 30, 2009, the mortgage portfolio comprised approximately 7,000 reverse mortgages with an accrued value of $837 million, secured by residential properties across Canada worth approximately $2.3 billion. HomEquity Bank and its predecessor, Canadian Home Income Plan Corporation, have been the main underwriters of reverse mortgages in Canada since pioneering the concept in 1986. HomEquity Bank has an effective direct-to-consumer distribution model as well as a well-established referral network. This extensive referral network includes all major Canadian banks, credit unions, mortgage brokers, investment and financial planning firms.
HomEquity Bank also offers competitive Guaranteed Investment Certificates (GICs) to investors across Canada through independent deposit brokers and major Canadian banks. For more information about HomEquity Bank, please visit www.homequitybank.ca. Additional information on HOMEQ, including annual and quarterly reports can be viewed at www.homeq.ca.
SOURCE HomEquity Bank
For further information: For further information: Arthur Krzycki, Director, Public Relations, HomEquity Bank, (416) 413-5182, email@example.com; Buket Oktem, MAVERICK Public Relations, (416) 640-5525 ext. 223, firstname.lastname@example.org