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
Housing market continues to moderate in June
Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were down between May and June 2021.
Home sales recorded over Canadian MLS Systems fell by 8.4% month-over month in June 2021, marking the third straight monthly slowdown since activity hit an all-time record back in March. While sales are now down a cumulative 25% from their peak, and below every other month in the last year, June transactions still managed to set a record for that month.
Month-over-month declines in sales activity were once again quite broad-based, with sales moderating in around 80% of all local markets, including almost all large markets across Canada.
The actual (not seasonally adjusted) number of transactions in June 2021 was up 13.6% on a year-over-year basis and marked a new record for that month.
While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months, said Cliff Stevenson, Chair of CREA. There remains a shortage of supply in many parts of the country, but at least there isnt the same level of competition among buyers we were seeing a few months ago. As these conditions continue to evolve over the summer and fall, your best bet is to consult with your local REALTOR for information and guidance about buying or selling a home at this stage in the cycle, continued Stevenson.
Record rise of home prices in May
In May the TeranetNational Bank National Composite House Price IndexTM was up 2.8% from the previous month, the largest monthly rise since the index series began in 1999. It was led by four of the 11 constituent markets: Ottawa-Gatineau (4.9%), Halifax (4.3%), Hamilton (3.7%) and Toronto (3.4%). Rises were more moderate for Vancouver (2.3%), Winnipeg (2.2%), Montreal (2.2%), Victoria (2.1%), Calgary (1.4%), Quebec City (1.2%) and Edmonton (1.2%). It was a third consecutive month in which all 11 markets of the composite index were up from the month before.
The May rise was consistent with the increase in number of home sales over the last several months as reported by the Canadian Real Estate Association. For a ninth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 2.1% in May, suggesting that the uptrend of the published (smoothed) index could continue.
The May composite index was up 13.7% from a year earlier, for a 10th consecutive acceleration and the strongest 12-month gain since July 2017. The 12-month rise was led by five markets Halifax (29.9%), Hamilton (25.5%), Ottawa-Gatineau (22.8%), Montreal (17.6%) and Victoria (15.3%). Toronto matched the countrywide average at 13.7%. Lagging that average were Vancouver (11.9%), Winnipeg (10.4%), Quebec City (9.8%), Calgary (4.5%) and Edmonton (3.6%).
Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven smaller urban areas of the Golden Horseshoe Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. In May all seven were up from the previous month and from a year earlier. The 12-month gains ranged from 27.6% for Brantford to 31.4% for Barrie.