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
Canadian home sales activity strengthens in July
Statistics released today by The Canadian Real Estate Association (CREA) show national home sales were up from June to July 2018.
National home sales rose 1.9% from June to July.
Actual (not seasonally adjusted) activity was down 1.3% from July 2017.
The number of newly listed homes edged down 1.2% from June to July.
The MLS Home Price Index (HPI) in July was up 2.1% year-over-year (y-o-y).
The national average sale price edged up 1% y-o-y.
National home sales via Canadian MLS Systems rose 1.9% in July 2018, building on increases in each of the two previous months but still running below levels recorded from mid-2013 to the end of last year. Led by the Greater Toronto Area (GTA), more than half of all local housing markets reported an increase sales activity from June to July.
Actual (not seasonally adjusted) activity was down 1.3% y-o-y. The result reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.
This years new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets, said CREA President Barb Sukkau. The degree to which the stress-test continues to sideline home buyers varies depending on location, housing type and price range. All real estate is local, and REALTORSremain your best source for information about sales and listings where you live or might like to in the future, said Sukkau.
Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices, said Gregory Klump, CREAs Chief Economist. Regardless, rising interest rates and this years stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up homebuyers, heading into the second half of the year and beyond.
Hacks to slash your car expenses
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Get regular tune-ups. When a vehicle is properly tuned, all systems work in harmony, including the fuel, ignition, emission and computer systems. While it can be a hassle getting to regular appointments at your mechanic or dealer, remember that you are investing in the long-term performance of your car, saving you time and money. Regular engine tune-ups bring power and efficiency back to your car, ensuring that its reliable, safe and road-ready.
Change your filters. There are many ways to keep your engine in good shape, helping it to last longer. One is checking the air filter every time you have the oil changed, because engine life and durability are directly related to keeping incoming air clean. Its an air filters job to remove contaminants from the air before it goes into the engine, and neglecting this component results in reduced performance. Fram extra guard filters provide premium engine protection and are proven to let in two times less dirt than the average leading standard retail brands.