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Tagreverse mortgage

Live Your Life: You’ll never see a U-Haul following a hearse!

Blog Image, Seniors, July 2018Our lifecycle goes something like this… Go to school. Find a job (and work hard for 40 years). Fall in love. Get married. Save money. Buy a house. Start a family. Retire on enough pension or savings. Enjoy the results of your hard work. Live in your house until death. Leave the house for your kids.

This is how most of us envision a normal lifecycle. But how often does this really happen? How many people really live happily ever after? What’s the big deal about tapping into home equity to fully enjoy life?

Continue reading “Live Your Life: You’ll never see a U-Haul following a hearse!”

Reverse Mortgages growing in popularity… Product of the year 2018?

Reverse mortgage

Mortgage stress test is the buzz phrase in mortgage lending for 2018. Every borrower, regardless of how much down payment you’re making, must pass a stress test to qualify for a mortgage. The math is simple, yet intimidating. Lenders must now use your mortgage contract rate PLUS 2.00% to qualify you.

Yes, that’s correct. You need to qualify at a rate that’s 2.00% higher than your actual rate. And it doesn’t matter if you have 35%, 40%, 50%, 60% or even 70% down payment. That will not have any impact on your approval. It’s all about how much income you can prove you earn and the strength of your credit worthiness.

For many, this new rule will prevent them from qualifying for a mortgage. And for seniors or people approaching retirement who still require a small mortgage to get through the next 10 or 20 years, these new mortgage rules are a killer. The stress test is surely causing stress among many Canadians!

I’M RETIRING AND WANT TO STAY IN MY HOME…

A reverse mortgage is a terrific option for homeowners who are at least 55 years old. It empowers them to be able to stay in their home and access tax-free equity without having to make regular payments.

Continue reading “Reverse Mortgages growing in popularity… Product of the year 2018?”

Taking a look at Reverse Mortgages

Retirement means different things to different people.   One thing we can all agree on is that we don’t want to run out of money…

Reverse Mortgages seem to be gaining some attention in the media again…. I thought it might be worth bringing or sharing some thoughts… here’s a recent article.

A Reverse Mortgage will give a lump sum of cash or monthly payments for life or a combination of both… it’s all tax free money…. Ok, that does sound good..

But upon closer inspection, we see that the interest rate is around 2% to 3% higher than what you can borrow money at for similar fixed rate products.  5.90% vs. 3.50%. Remember, you are borrowing money and NOT paying it back.. the interest just accumulates and compounds…   there are also appraisal fees, administration fees, legal fees… and if you want to sell your home and pay this off, you face huge penalties that could range from 11 months worth of interest to 4 months of interest….Yikes!

Another alternative would be to borrow a secured line of credit at Prime plus 0.50% with interest only payments…. currently, that rate would be 3.50%….

I remember when these products came out in the mid ’90s.. they were horrible… they have changed and rates are a little better, but my advice is talk with a qualified Mortgage Broker or Financial Planner before making any decision…

My last thoughts… I wouldn’t put my parents into one of these products…..

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