The Canadian mortgage industry has never been more confusing. Do I use a broker? Do I go straight to my bank? Who can get me the best rate? Who can give me the best independent advice?
Alma Pasic has been helping clients navigate the confusing World of mortgages and financing in Canada for almost 20 years. Using her expert knowledge of the industry and relationships with leading financial institutions, Alma gets her clients the approvals needed with the best terms.
As well as being the coauthor of “Complete Home Buyer’s Guide for Canadians”, available on amazon.ca, Alma is also a leading provider of real estate investment seminars throughout the Lower Mainland.
She offers a full service financial platform across a wide range of products and options by working with a range of realtors, accountants, builders, developers and financial planners.
Alma has the resources and relationships to access the complete range of mortgage options.
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Are Reverse Mortgages a Good Idea?
Are Reverse Mortgages Ever a Good Idea?
Home equity is a tempting source of capital or income for older investors but what are the hidden catches? Gordon Powers of RateSupermarket.ca offers advice
November 18, 2014
Gordon Powers RateSupermarket.ca
This article originally appeared on financial advice website RateSupermarket.ca. To read the original article, click here.
Ask advisors whether the money tied up in your home should be counted as an asset that you can tap in retirement and youll get a wide variety of opinions.
Most financial planning software programs dont consider home equity when tallying potential retirement income. In looking at the few that do, its clear that theres no agreed-upon method for calculating its impact on your financial future.
Despite this, home equity remains a tempting target for older investors to tap. Dont forget that close to three quarters of Canadians over age 60 are homeowners, not renters a considerably higher rate than for most other age groups.
You can always downsize, of course, and invest the difference. But, other than that, there really arent a lot of options when it comes to wringing money out of your home.
HELOCs Not Generally Available
A home equity line of credit (HELOC) secured against the value of your property is likely your best bet. But these are typically less useful for many older homeowners since they often have a harder time qualifying unless they already have some regular income.
Thats why a growing number of baby boomers exiting the workforce, or in the midst of a grey divorce, are looking to mine the value of their homes through a reverse mortgage.
A reverse mortgage allows you to borrow from your homes equity while not having to make any monthly payments. Unlike most mortgages, theres no credit check, no income confirmation, and no insurance requirement. Approval is based only on your age and home equity.
Another major attraction is that the payments you receive arent considered taxable income and thus wont affect any government retirement benefits.
Qualify As Young As Age 55
All this anticipated demand has prompted HomEquity Bank, the countrys sole provider of reverse mortgages, to recently lower the minimum age threshold for its CHIP Home Income Plan from 60 to 55.
But, before you rush in, understand this: The amount you owe increases over time, while the amount of equity in your home likely decreases. Whats worse, the younger you are, the more the compound interest will grow, and the more you will owe.
And there are a few upfront fees to consider as well.
Watch For Additional Costs
First, youll need a home appraisal which will cost $200 to $400, depending on location. On top of that, lawyers fees, required by law on all reverse mortgage transactions, can range from $300 to $600.
The third setup cost is closing and administrative fees, which amount to $1495 a charge HomEquity has waived during past promotions, at least for buyers willing to lock in for a three or five-year term.
But, even then, this is still an expensive option. Right now, for instance, HomEquity is charging 4.75 per cent on a variable-rate mortgage which is 1.75 percentage points above prime. Five-year terms are available at 5.69 per cent. That compares with rates as low as 3.19 per cent for conventional five-year mortgages.
Debt Doubles Every 11 Years
Going this route means that your debt level is going to double about almost every 11 years at todays interest rates, all the while eroding the value of your estate.
But older Canadians are definitely buying, largely because theyve seen the rates on their fixed-income savings fall significantly while their houses have at least maintained their value or better.
In a world where people are living longer and spending more, the attraction is obvious. Still, tread carefully before you sign up.
Copyright 2015 - See more at: http://www.rew.ca/news/are-reverse-mortgages-ever-a-good-idea-1.1591812#sthash.WmD0dlm9.dpuf
Employment increased by 35,000 in October
In October, employment rose for youth aged 15 to 24, while it was little changed for the core-aged population of 25- to- 54 year-olds, and for people 55 and older. The largest employment increase was in Quebec, followed by Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick. At the same time, there was a decline in Saskatchewan.
Employment rose in several industries, led by other services; construction; information, culture and recreation; and agriculture. Employment declined in wholesale and retail trade.
The number of private sector employees increased in October, while public sector employment and self-employment were little changed.
Canadian home sales edge up again in October
According to statistics released by The Canadian Real Estate Association (CREA), national home sales posted a modest monthly increase in October but remain below levels recorded one year ago.
Newly introduced mortgage regulations mean that starting January 1st, all home buyers applying for a new mortgage will need to pass a stress test to qualify for mortgage financing, said CREA President Andrew Peck. This will likely influence some home buyers to purchase before the stress test comes into effect, especially in Canadas pricier housing markets. A professional REALTOR is your best source for information and guidance in negotiations to purchase or sell a home during these changing times.
Home sales via Canadian MLS Systems edged up 0.9% in October 2017 on the heels of monthly increases in August and September, but remained almost 11% below the record set in March.
National sales momentum is positive heading toward year-end, said Gregory Klump, CREAs Chief Economist. It remains to be seen whether that momentum can continue once the recently announced stress test takes effect beginning on New Years day. The stress test is designed to curtail growth in mortgage debt. If it works as intended, Canadian economic growth may slow by more than currently expected.