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What You need to Know about a Reverse Mortgage for Seniors
If you are a homeowner or aspiring to be one in the coming months, then the term mortgage may not be a new concept to you. It is a form of a loan that is mainly issued to either buy or construct a home whose ownership entirely passes to you after you have paid to your last installment. A reversed mortgage in Canada is no different, only that it comes with some exceptions that make it somehow different. Some of these exceptions include no monthly installments which mean that no credit or income/debt requirements, only accessible to seniors ( 55 years and above) and the borrowers ability to settle the loan are not a primary concern. Lets take a closer look at the requirement of a Reverse Mortgage and emphasize on what you ought to know.
Monthly repayment of mortgage: The Canadian law on a reverse mortgage is very clear, no monthly payments of the mortgage. Nobody should mislead you out there, not even the internet that most people trust to give them perfect information. Note that in Canada, we deal with reverse mortgage differently from other countries. Therefore, if you have to do any research or seek clarification on the same, ensure you base your findings within the Canadian context to avoid getting the wrong information. Unlike other forms of mortgage, with a conventional mortgage on your home, the borrower owes more that he initially borrowed as the interest is added back to the outstanding amount. If you are willing, you have the option of paying some or all interest once in a year; although it is not a MUST.
What makes reverse mortgages attractive is its flexible requirement. Where else will you find a mortgage that allows you to hold it for 5 to even 25 years without any monthly installments? The good thing about such terms is that in as far as the reverse mortgage in Canada loan accrues over time, the value of the house in Canada also tends to increase with time which gives you a win-win situation.
Apart from that, we all know that the Canadian money market is subjected to a lot fluctuation in interest rates which may end causing the borrower to spend more than the fair market value of the common loans but not with Canada reverse mortgage. Therefore, as a senior, you dont have to worry about your debt exceeding the fair market value in future due to such external factors which are very normal.
Finally, reverse loan mortgage in Canada is only given by one institution in Canada which means that there will be no need for the rate on shopping. However, note that unlike in regular mortgage, the rate in reverse mortgage is slightly higher due to the long duration involved.
Vancouver the main driver of the Composite in December
Vancouver the main driver of the Composite in December says Teranet and National Bank of Canada
Without Vancouver, the Composite index would have declined for a fourth month in a row. The strength of Vancouver’s index is consistent with continued tight home resale market conditions. Toronto’s index declined for a fifth consecutive month, but the unsmoothed index (see note on methodology on next page) rose for a second month in a row (middle chart). Unless the unsmoothed index relapses in January, the sequence of declines in the smoothed index should then be interrupted. However this improvement is likely to prove temporary, as it might have resulted from buyers rushing to avoid the new bylaws on qualification for an uninsured mortgage (implemented in January 2018). This view is supported by the increase in Toronto home sales in November and December compared to previous months (bottom chart). Therefore, a resumption of the downward price trend early this year cannot be excluded.
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201712 TNB monthly commentary
Bank of Canada increases overnight rate target to 1 1/4 per cent
The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.
The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Banks October Monetary Policy Report(MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices.
In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.