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
Almost one-quarter of Canadian seniors are caregivers
While older Canadians may be more likely than their younger counterparts to require help and care in their daily lives, almost one-quarter of Canadian seniors aged 65 years and older are caregivers themselves. And while the roles and responsibilities of these senior caregivers may have changed in the context of the COVID-19 pandemic, the challenges they face could be heightened.
Although the pandemic has affected the lives of all Canadians, seniors have been identified as a population particularly vulnerable to COVID-19. Not only are seniors more at risk of severe illness, they are also more affected by isolation measures. As a result, many senior caregivers who help people living outside of their household may not have been able to provide the same level of care that they usually do. Senior caregivers providing help to their spouse may also have seen their burden of care increase, given the possible lack of other support during the pandemic. For example, older caregivers who are usually supported by their adult children to provide help and care for their spouses, may have had to perform additional activities and provide more hours of care than usual. While the data in the current study were collected prior to the COVID-19 pandemic, the results highlight the many challenges senior caregivers already faced.
A new study, The experiences and needs of older caregivers in Canada, uses data from the 2018 General Social Survey on Caregiving and Care Receiving to provide a profile of senior caregivers in Canada. Senior caregivers are those who have provided help or care to a spouse, another family member, or a friend with a long-term health condition, a physical or mental disability, or problems related to aging.
Senior caregivers are likely to continue to play an important role in the years to come. As the needs for care and help increase with an aging population, smaller families and geographic mobility among Canadians may reduce the supply of potential younger family caregivers. Within this context, many older Canadians may be relied upon to become care providers, even though they may develop health issues of their own, including age-related physical and cognitive declines, chronic illness and some level of disability.
Week in review
Real GDP continued to recover in August, gaining 1.2% m/m, a result above the +0.9% print expected by consensus. This marks the fourth monthly gain in a row for this indicator, however total output is still down 4.6% from its pre-pandemic (February) level. Production rose in 15 of the 20 industrial sectors covered in August, with two others remaining flat in the month. Goods sector output climbed 0.5% on decent rises for construction (+1.5%) and manufacturing (+1.2%). Industrial production edged up 0.1%. Services-producing industries, meanwhile, experienced a 1.5% surge in production, with the steepest progressions occurring in arts/entertainment (+13.7%), accommodation/food services (+7.3%) and educational services (+3.4%). Year on year, total economic output was down 3.8%.
Canadian GDP registered yet another advance in August but the economic recovery remains highly uneven. Some sectors have now fully recovered from the COVID-19 shock and currently stand above their pre-pandemic peaks. That is the case for agriculture/forestry/fishing/hunting (+2.5% compared with February), finance/insurance (+2.1%), real estate (+1.5%), wholesale (+1.3%), retail (+1.2%) and utilities (+0.8%). That said, certain industries continue to suffer. For instance, production in the mining/quarrying/oil and gas extraction segment remains 17.2% below its February level thanks in large part to depressed energy prices. The sectors most affected by social distancing measures are also struggling to recover. Output in the arts/entertainment segment is roughly half what it was before COVID. Production in accommodation/food services, meanwhile, remains 28.2% short of pre-pandemic levels. Transportation and warehousing is also tracking 20.5% below February. While the economic rebound is likely to have extended into September Statistics Canada advance estimate suggests production expanded another 0.7% in the month the steep gap between the best and worst performing industries is likely to endure in a context in which people continue to avoid social contacts. Looking further ahead, the real question remains whether the recovery can be sustained, especially now that COVID-19 cases are surging back up, forcing some provincial governments to reintroduce social distancing measures.