Let's compare the CHIP Income Advantage to a Home Equity Line of Credit, or HELOC
Lets compare a CHIP reverse mortgage Income Advantage plan to a home equity line of credit, or HELOC. To be clear this gets tricky as one is an apple and the other is an orange.
A Home Equity Bank CHIP Income Advantage equity loan program allows you to arrange a monthly or even quarterly draw against the approved limit while you are NOT REQUIRED to make regular monthly mortgage payments. The plan starts with an initial draw of a minimum $20,000 and then you draw a monthly amount of $1,000 for your needs. You can continue to do so until you have reached the maximum amount available to be withdrawn.
A HELOC, on the other hand, is a line of credit secured against the equity in your home. Often the interest rate is set at Prime plus 0.50%. Today, with prime at 3.95% this will have an effective rate of 4.45%. A HELOC requires a minimum monthly payment of at least the interest due at the end of each month.
For comparison, we draw an income supplement amount of $1,000 per month from the beginning to a point in time where the balance owing is matching the maximum withdrawal amount for the CHIP loan.
To do this let us use the CHIP Calculator to assess the borrowers age and the value of the Home. For this demonstration, we use the average price of a home in this area of $535,000. The calculator suggests an amount of $175,500 on a single family home if owners are 70 years of age.
With this value, you will reach the maximum drawdown in the 13th year with CHIP and the 14th year with HELOC.
Here is where the two plans differ. With the CHIP you will receive the full $1,000 every month. With the HELOC you draw $1,000 every month and required to make the minimum monthly payment which grows each month. By the 13th year, the minimum amount is $645/ month; you are only receiving $355/m to use for living. Then once you have reached the limit, you need to continue to make the minimum monthly payments, but you can no longer draw more as you are at the ceiling. With the CHIP you cannot pull more, but you also do not have any payments while living in the home. The last paragraph describes how with a CHIP you will draw $1,000 every month, and with a HELOC the $1,000 decreases more each month with the rising minimum interest payment.
A consideration to be compared is the cost of the two different options. By the time the balance hits the $175,500 ceiling of each plan (for arguments sake, as each will have a different limit) lets look at the interest costs. The HELOC will have a total interest cost of approx $ 57,000. The price after 14 years in the CHIP will be approx $ 76,000 in total.
The Chip will consume more of your equity over time but will also provide you the full $1,000/m draw for longer.
A strategy some use is to start with the HELOC plan and then at an appropriate time the HELOC is paid out with a CHIP reverse mortgage. The benefit here is the CHIP does not get paid until you sell or move out of the home. The balance will continue to climb but you are never required to make a payment, and if the balance outgrows the equity and cost to sell the home, CHIP absorbs the price, not your estate.
Canadian home sales edge higher in March 2019
Home sales via Canadian MLS Systems edged up 0.9% in March 2019 following a sharp drop in February, leaving activity near some of the lowest levels recorded in the last six years.
There was an even split between the number of markets where sales rose from the previous month and those where they waned. Among Canadas larger cities, activity improved in Victoria, the Greater Toronto Area (GTA), Oakville-Milton and Ottawa, whereas it declined in Greater Vancouver, Edmonton, Regina, Saskatoon, London and St. Thomas, Sudbury and Quebec City.
Actual (not seasonally adjusted) sales activity fell 4.6% y-o-y to the weakest level for the month since 2013. It was also almost 12% below the 10-year average for March. That said, in British Columbia, Alberta and Saskatchewan, sales were more than 20% below their 10-year average for the month. By contrast, activity is running well above-average in Quebec and New Brunswick.
It will be some time before policy measures announced in the recent Federal Budget designed to help first-time homebuyers take effect, said Jason Stephen, CREAs President. In the meantime, many prospective homebuyers remain sidelined by the mortgage stress-test to varying degrees depending on where they are looking to buy. All real estate is local, and REALTORS remain your best source for information about sales and listings where you live or might like to in the future, added Stephen.
5 ways to help stop the sniffles this allergy season
(NC) Spring has sprung again and while the warmer weather is definitely a welcome change, the return of itchy eyes and a constantly dripping nose may not be.
Its estimated that 25 per cent of Canadians are affected by seasonal allergies, and depending on what you are allergic to, allergy season may not just affect you in the spring but could also linger right up until the first frost in the fall.
This spring, try to avoid the discomfort by getting to the bottom of what is causing your allergies before they start. Here are five tips to help you get ahead of your symptoms:
Check the pollen forecast: Be on top of this as it can change daily and really affect your symptoms. If youre planning on exercising, go to the gym or exercise inside on warm, windy days.
When you are outside, protect yourself: Wear sunglasses or a hat not only do they look good and block the sun, they also help keep pollen off your body and out of your eyes.
Cover up when being active outside: If you are doing outdoor activities like cutting the lawn or gardening, consider wearing a mask or scarf to cover your nose and mouth.
Protect yourself from pollen: We carry a lot of pollen into the home with us. Wash your bedding more frequently during spring, summer and fall; keep your windows closed and remember your pets can track pollen into the house, too.
Find the right product: Speaking to your local Shoppers Drug Mart pharmacist can be your first line of defense. They can help assess your symptoms and recommend an over-the-counter medication or product. If this isnt enough to kick your symptoms, your pharmacist can write you a prescription for a medication in all provinces excluding British Columbia and Ontario. If your symptoms are more severe, pharmacists in B.C. and Ontario can work with your doctor to make sure you have the right treatment option for you.