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
Decline in single-family component moderated by gain in multi-family dwellings
Canadian municipalities issued $8.1 billion worth of building permits in June, up 2.5% from May and the second highest value on record. Higher construction intentions for multi-family dwellings and commercial buildings were mainly responsible for the national increase. All building components reported gains in June, except for single-family dwellings.
The value of residential building permits fell 0.9% in June to $5.0 billion, the fourth decrease in five months. The decline was mainly the result of lower construction intentions in four provinces, notably Ontario.
In June, the value of permits for single-family dwellings decreased 12.5% to $2.4 billion. Seven provinces registered declines, with Ontario being the main contributor to the decrease.
Conversely, construction intentions for multi-family dwellings rose 12.5% in June to $2.7 billion, marking a third consecutive monthly increase. Seven provinces registered gains, led by Ontario and British Columbia.
Click here for more information
Is a home equity line of credit right for you?
(NC) Buying a new home is an exciting but often stressful experience. The variety of financing options now offered by lenders is overwhelming.
One of the most popular options is a home equity line of credit. With interest rates typically lower than other forms of credit, this line of credit can help you reach your financial goals. However, there are several factors to consider when deciding if this product is right for you.
Banks market home equity lines of credit under different names, which might make it challenging to recognize when you are being offered one. They are commonly combined with a regular term mortgage in the form of a readvanceable mortgage.
When combined this way, the credit limit on your home equity line of credit will often increase automatically as you pay down the principal on your mortgage. A readvanceable mortgage may also tie together other credit and banking products such as personal loans, credit cards and car loans under a single credit limit.
Benefits of bundling these products together include convenience and lower interest rates. But the downsides include fees and restrictions if you want to switch to another lender, and variable interest rates that could increase on short notice. Your financial institution also has the right to demand that you pay the full amount owing at any time.
When deciding if this lending product is right for you, remember that your home is likely your biggest investment. You should beware of overborrowing against its equity, especially if youre counting on it to fund your retirement.
Most lenders allow you to make interest-only payments on your home equity line of credit, making it easier to delay repaying the principal balance, explains Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada. Continually borrowing against your homes equity without repaying the principal can jeopardize your long-term financial security. For instance, in the event of a housing market correction you might owe more than what your home is worth.
Ask yourself if a low interest rate and easy access to credit may encourage you to spend more than you can afford to pay back. You could find yourself in a debt spiral, using additional home equity just to stay current on your mortgage. This could make you more vulnerable to unforeseeable events, like job loss, illness or an interest rate hike.
Consider creating your own plan to pay down the principal amount borrowed over a fixed period. Aim to pay more than the minimum payment or interest every month. With a home equity line of credit, there is usually no penalty to pay back as much as you can at any time.
Find more information online at canada.ca/money.