Is a reverse mortgage right for you?
What is a CHIP reverse mortgage?
A CHIP reverse mortgage allows Canadians 55 and older to unlock up to 55% of the value of their home to assist with any financial need. The money received from a reverse mortgage is tax-free, there are no health checks to qualify for and no payments are required interest or principal for as long as at least one borrower lives in the home. The homeowner(s) maintains title ownership of the home at all times. The home must be your principal residence and the property can be a house, townhouse, or condo, as long as there is enough equity to qualify.
Reverse mortgage loans can be used to:
● Pay off or consolidate debt;
● Supplement income;
● Finance home renovations or repairs;
● Pay for unexpected medical or emergency expenses;
● Financially aid a family member(s) or,
● Improve your standard of living by paying for a vacation getaway or making a special purchase.
The truth is, debt in retirement used to be a faux-pas, but today, more and more Canadians are entering retirement with growing debt. The average life expectancy is higher than ever and the cost of living is often greater than pension incomes.
Since 2005, HSBC has surveyed more than 140,000 people in 15 countries about retirement. The following are keys findings for Canada:
● Retirees 23% saw their standard of living deteriorate after retiring. 31% feel they did not adequately prepare for retirement.
● Working Age 81% had a major life event hamper their ability to save. 18% had their ability to save hurt by the economy. 37% are not saving for retirement.
● Pre-Retirees 61% worry about having enough money to live day-to-day. 40% are not confident they can maintain a comfortable retirement. 68% worry they will run out of money. 44% are not preparing adequately and 52% cite their mortgage or debts as the reason.
● Non-Traditional Sources of Income 65% point to a domestic second property. 32% consider a foreign second property as a source of funds.
A reverse mortgage is a smart way for seniors to access the equity theyve accumulated in their home as tax-free cash. Despite the fact that reverse mortgages have been in Canada since 1986, there are still a lot of misunderstanding. Much of the media and misinformation about reverse mortgages is rooted in the U.S. In the U.S., there are numerous reverse mortgage providers, each offering different features. HomEquity Bank, the only provider of reverse mortgages in Canada, is a federally regulated Schedule 1 Canadian Bank, which ensures that you have a trusted and secure bank providing you with your reverse mortgage. Over the years, HomEquity Bank has been improving the reverse mortgage program, making interest rates more competitive, adding term options and increasing the amount of home equity a client can access. It is also mandatory for clients to seek independent legal advice before being approved for a reverse mortgage.
After first learning about CHIP from her mortgage broker, Karen used her money to pay off debt that had built up after her husbands stroke. Creditors are no longer calling and she is now free to spend quality time with her husband.
Bill and Linda learned about the CHIP benefits and used the money for much needed home renovations and repairs which they werent able to previously pay for.
Miriam was able to take a trip she always promised herself with extended family and friends without having to take money from her precious retirement savings.
Contact me today if you would like more information on a reverse mortgage and find out if it is the right product for you.
Diane Sainsbury, Certified Reverse Mortgage Specialist
(Simcoe County) 705-445-2584 (Toronto) 416-820-8471
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.
Tips to take charge of your finances and live within your means
(NC) Are you stressed about money? Being in control of your spending is one way of reducing stress in your life.
According to Statistics Canada, most of us are burdened with high levels of household debt. Simply put, too many people are spending more than they earn. They are saving less and not saving enough for retirement. At the same time, people are living longer.
Living within your means is not always easy, especially when money is tight, but it is the best way to avoid excessive debt. A heavy debt load makes you vulnerable if you lose your job, have unexpected expenses or interest rates go up on your loans.
Here is how you can start:
Make a budget. Having a budget that lays out sources of income and monthly expenses can help you commit to a spending plan.
Know the difference between your wants and needs. Put your needs first; your wants can wait.
Choose your credit card wisely. Pay off the balance in full each month so you can build a good credit history and avoid high interest charges.
Think ahead to retirement. Canadians are living to an average age of 86. If you retire at 65, that could mean you are living off savings for 21 years or more. Start saving as soon as you can.
Find more tips from the Financial Consumer Agency of Canada online at canada.ca/it-pays-to-know.