So whether you're buying a home, renewing your mortgage, refinancing, renovating, investing, or consolidating your debts — I’m the VERICO Mortgage Advisor who can help you get the right financing, from the right lender, at the right rate.
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.
OSFI tightens mortgage rules Edit
The Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of Guideline B-20 Residential Mortgage Underwriting Practices and Procedures. The revised Guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions.
The changes to Guideline B-20 reinforce OSFIs expectation that federally regulated mortgage lenders remain vigilant in their mortgage underwriting practices. The final Guideline focuses on the minimum qualifying rate for uninsured mortgages, expectations around loan-to-value (LTV) frameworks and limits, and restrictions to transactions designed to circumvent those LTV limits.
OSFI is setting a new minimum qualifying rate, or stress test, for uninsured mortgages.
Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.
OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.
Under the final Guideline, federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and are updated as housing markets and the economic environment evolve.
OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits.
A federally regulated financial institution is prohibited from arranging with another lender a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institutions maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.
To find out how this will affect you, please contact me at anytime.
Easy ways to keep more money in your pocket
It goes without saying that most of us would appreciate a little more money in our pockets. Believe it or not, its actually an achievable goal. In fact, a few simple tips can help you uncover meaningful savings each and every month. Need some ideas? Heres a little inspiration to get you started:
1. Pack food from home for lunches and snacks. Skip sandwich bags and opt for reusable containers, cutlery and drink bottle.
2. Switch light bulbs to CFLs. On average, it costs $250 a year in energy costs to light your home with incandescents. Save $150 by going with CFLs. Theyre more expensive initially, but will last 10 times longer.
3. Review and negotiate your service plansphone, internet, cable and television content.
4. Invest in topping up your insulation. Attic insulation can settle and compact over time, diminishing its original R-value and increasing heating/cooling costs. Topping it up with a quality batt insulation, like Roxul Comfortbatt, will immediately help improve the comfort of your home and reduce your monthly energy bills.
5. Pay off credit card debt and swap cards for lower interest rate options.
6. Install low-flow water fixtures to cut down on excess water consumption.
7. Lower your thermostat by two degrees in cold weather and increase it by two degrees in warmer weather.
8. Launder your clothes in cold water and at off-peak times.
9. Avoid impulse shopping. Stick to your list and avoid window shopping, which tends to draw buyers in.
10. Save money on entertainment by looking for free activities. For options in your area, try a simple internet search. You might be pleasantly surprised at the wide variety of activities and entertainment available for no or low cost.
Collectively employing the tips above could potentially add up to thousands in annual savings, proving that sometimes change can be a good thing.