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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.
Canada's Manufacturing heavily impacted in March
Manufacturing shipments fell 9.2% in March after climbing 0.4% the prior month. This result was more than double the drop expected by consensus (-4.5%). Lower sales were registered in 17 of the 21 industries surveyed, including transportation (-26.5%), petroleum and coal products (-32.2%), and plastics/rubber products (-10.9%). Alternatively, shipments increased for food manufacturing (+8.2%) and paper manufacturing (+8.4%). With the price effect removed, total factory sales decreased 8.3% m/m, while inventories grew 0.8%. As a result, the real inventory-to-sales ratio rose from 1.56 to 1.72, a bad sign for future production.
Manufacturing sales came in much worse than expected in March, matching their largest one-month decline on record (December 2008). Sales retraced all the way back to their level in June 2016. It should come as no surprise that disruptions from COVID-19 were the chief cause of the decline. Indeed, 78.3% of manufacturing businesses reported being impacted by the pandemic. Transportation saw a significant decline owing to plant closures, while refineries lowered production as demand and prices waned. Not everyone experienced an adverse shock, as evidenced by marked increases for food (groceries) and paper manufacturing (toilet paper) in the month. This will likely be transitory, however, as households rushed to stock up in March. Eight of the ten provinces reported lower sales, with Ontario and Quebec posting the largest declines. All told, given that confinement measures had been in place for only two weeks in March, the April manufacturing picture can be expected to be even worse.
Home sales fell 56.8% from March to April, to the lowest level recorded since the inception of seasonally adjusted data in 1988. The fall was generalized to all the 26 major markets tracked by CREA except Newfoundland and Labrador, where sales rose 13.6%. New listings also fell sharply (-55.7%) but active listings only 8.7%. Therefore, the active-listings-to-sales ratio (our preferred gauge of market conditions) skyrocketed from 4.3 months of inventory in March to 9.2 in April, the largest since the 2008-09 recession.
Source: National Bank of Canada
Another strong increase in the Composite Index in March
In March the TeranetNational Bank National Composite House Price IndexTM was up 0.6% from the previous month. As was the case in February, this was double the average March rise of the last 10 years. Leading the advance were the markets of Ottawa-Gatineau (1.1%), Vancouver (1.0%) and Toronto (0.9%). Trailing the countrywide average were rises for Hamilton (0.4%), Quebec City (0.3%), Montreal (0.2%) and Halifax (0.1%). The index for Victoria was essentially flat. Down from the previous month were Calgary (0.1%), Edmonton (0.6%) and Winnipeg (0.8%).
The index for Vancouver has now gone six months without a decline. Its previous run of 14 straight months without a rise seems to be definitely over, especially since the Vancouver resale market has returned to balance as measured by ratio of listings to sales. The index for Victoria has move little over the last seven months. Weakness persists in the Prairies: the indexes for Calgary and Winnipeg have declined in five of the last six months, that for Edmonton in four. In central and eastern Canada the story is different. The index for Ottawa-Gatineau has not declined in any of the last 12 months, that for Toronto in only one and those for Montreal, Hamilton and Halifax in two. All of these last five markets were at a historical peak in March.