Reverse Mortgages

reverse mortgages

 

HomEquity Bank’s Reverse Mortgage Options

Please note that the rules in Canada are different when it comes to reverse mortgages than in the U.S., please do not look to U.S. sources for information. Canadian relevant information is listed below with links to various Bank and Governments resources or for more information call:

Michael Curry
VERICO The Mortgage Wellness Group Ltd.
Call (705) 717-5598
email mcurry@mortgagewellness.ca

How a reverse mortgage works:

If you are a Canadian property owner older than fifty five, you can get up to fifty per cent of your home’s worth by using an equity based reverse mortgage. You are not expected to make any mortgage repayments and do not have to pay any interest or principal until eventually you sell the residence or pass away. The mortgage is settled from the proceeds of the home’s sale.

The amount you are able to access depends on your age and where your home is located. The younger you are, the less you will be able to receive. Since most people never repay any of the reverse home loan funds, the bank has to consider how long the home will be financed for typically.

HomEquity's Reverse Mortgages for Canadians

Note: If the principal and interest should accumulate to more than the value of the home over time – HomEquity Bank will eat those losses and cannot go after any of your other assets.

Are home equity mortgages a beneficial strategy for retired people? This is something you have to decide for yourself. If the funds are going to be used for unnecessary purchases – then probably not. However, if you can’t afford to pay your bills and feed yourself, then that’s a different matter entirely. Below are some of the key features of home equity mortgages provided in Canada by HomEquity Bank.

• Exclusively for Canadian property owners 55 and older (applies to both you and your spouse)
• There are absolutely no credit or income requirements since it is an equity based mortgage
• You can obtain up to 50% of the valuation of your home
• You will collect the CHIP home equity funds completely tax free
• You can take the money as monthly cash flow, in a lump sum, or a combination of both
• No repayments are necessary while you or your partner reside in your residence and you will never be asked to sell 
• You preserve ownership and control of your residence
• Your estate is very well safeguarded

Reverse Mortgage Set Up Costs

  • Home appraisal-typically $225 to $300 (upfront cost)
  • Independent Legal Advice-$200-$400 (upfront cost)
  • Closing and Legal Costs – $1,495 which are deducted from the CHIP home income plan funds – therefore, not an out of pocket expense. (not an upfront cost)
  • All of the above are one time fees. There are no annual fees, service charges, etc.

How To Qualify For a Reverse Mortgage:

  • The registered homeowners must be at least 55 years or older
  • There is no maximum age limit and there are no income or health qualification requirements
  • The maximum loan amount is 50% of the appraised value of the home, dependent upon the age of the borrowers. At age 55, it would likely be 20%-23% of the value of your home, at mid to late 70’s 45% to 55% of the home’s value
  • There is no income qualification requirement and there are no income or health qualification requirements
  • The loan must be a first mortgage and all property taxes must be up to date, although this can done with the loan proceeds

It is absolutely no hidden secret that numerous Canadians are heading towards their retirement without a great deal of savings in the bank.
In a recently available research survey of fifteen hundred Canadians aged fifty plus, by the non-profit Investor Education Fund, only two in ten house holds said they would definitely have more than $250,000 reserved for their retirement plan. Half of all households questioned said they believe that they will run out of their financial savings within the initiall ten years of leaving the workforce. The survey was developed in January 2013 by The Brondesbury Group via online interviews conducted with a representative group of 1500 current and former homeowners across Canada. All respondents were at least 50 years old. Half were retired. The margin of error is +/- 2.5%, 19 times out of 20. To see the full survey click here.
Confronted with these kinds of daunting possibilities, many Canadian household owners are contemplating the alternative of a reverse mortgage to gain access to the collateral in their residence.

It’s increasingly becoming a popular choice among seniors. Steve Ranson, president and CEO of HomEquity Bank, which administers the Canadian Home Income Plan (CHIP), the main source of reverse mortgage products in Canada, says they currently have about $1.5-billion in mortgages outstanding. He projects about 2,500 new customers, or $250-million in mortgages, this year.

“Our average clients are couples in their early 70s,” he says. “They’ve been retired for a certain time and they are on a fixed income. Interest rates are low so whatever they’ve been earning on their investments is less than they planned on and they’re saying, we need a little bit more money. They bought a house for $30,000 or $40,000, now it’s worth $400,000. They love their house, they don’t want to move, but the problem is how do you get at that equity? And that’s what we do.”

Mr. Ranson states that older seniors are typically approved to obtain a greater portion of their home’s worth, whereas younger retirees get significantly less, with the typical average being around 33 per cent. Yet another component of the system is the “no-negative equity guarantee,” which means that irrespective of how much interest you accumulate, you will never owe more than the home is really worth.

“The advantage is that if you have got a holiday cottage you wish to leave to the children or you have got additional investments you want to give to charity or whomever, you will never have to be concerned that those assets are in some way going to be used to cover the loan. You are only ever going to owe the value of the residence,” Mr. Ranson says.

Financing costs are different dependent upon on the time period.
The six-month term rate is presently 3.99 per cent, whilst a five-year rate is 5.45 per cent. At the finish of each term the home finance loan resets to the up to date published mortgage rates. Presently there is an option to cover the interest yearly, and Mr. Ranson says they will give consumers 50 basis points (half a percent) off the rate if they decide on that method. He also notes that just around five to ten per cent of people decide to make those annual interest repayments.

“It really is designed for people who need cash flow,” says Mr. Ranson.

HomEquity Bank Income Advantage is a loan guaranteed by the equity in your house
Anyone can easily select to receive the funding as month-to-month cash stream or as a series of lump sums, or a combination of both.
The major distinction with HomEquity Bank Income Advantage is that you do not have to
make any kind of monthly payments, neither interest or principal, for as long as you or your husband or wife reside in personally in the home.
You preserve ownership and control of your house even while making the most of all the many advantages of having turned some of its worth into hard cash. Within a financial planning context, HomEquity Bank Income Advantage provides you with a stable way to help improve your cash flow so that you can essentially optimize your financial investment profits by remaining invested much longer and by helping you manage your taxes more efficiently.

Reverse Mortgage – some important facts

HomEquity Bank Income Advantage was developed specifically for home owners fifty five and older.
This is applicable to both you and your husband or wife.
There are no credit or income requirements. This would mean that if your income or credit
circumstances change at any time period in the foreseeable future, your access to home equity will not be influenced and it will be there for you at any time you need it.
You can access up to 50% of the value of your home. The specific amount is decided by the present assessed worth of your home, your age and that of your spouse, and the location and the type of home you possess.
You are given the funds tax free due to the fact that it is considered a loan. This means the cash received is not added to your taxable income for that year. This in turn can potentially improve your tax planning flexibility.
You can select to receive the financing as per month payment as well as a series of lump sum payments.
You can increase your month-to-month finances, while having the available funds to complete major property renovations, vehicle purchases and more.
No repayments are required while you or your spouse live in your home. The full amount only ends up being payable whenever your home is sold, or if you relocate.
You keep ownership and control of your home. You will never be asked to move or
sell to repay your HomEquity Bank Income Advantage loan. All that is required is that you
sustain your property and stay up-to-date with current property taxes, fire insurance and condo or maintenance fees.
Your estate is well protected. HomEquity Bank Income Advantage monthly cash flow option reduces the effects of compounding interest on equity, so your desired income stream can last longer.

The CHIP Reverse Mortgage is a non-recourse loan, meaning that the lender can only be repaid on the loan from the proceeds of the sale of the property either when the homeowner decides to sell the home or their estate sells the property. A Reverse Mortgage is not a “loan” that can be “called” at the lender’s discretion.

Reverse mortgage pros and cons

Pros:

Easy way to tap your home’s equity

Very simple application process

No need to move and you still own your home

Consolidates debt and provides extra money

No repayments until you move or die

Cons:

Erodes the value of an asset (potentially depending on market value increases)

Slightly more expensive way to borrow – due to no repayments

Appeals to those in trouble or with limited resources

Doesn’t address underlying financial issues

Easy to forget the accumulating debt

For more information on this product, without any obligation, call or email me:

Michael Curry
VERICO The Mortgage Wellness Group Ltd.
Call (705) 717-5598
email mcurry@mortgagewellness.ca

The Mortgage Wellness Group – Your Mortgage Broker in Barrie

Latest news from HomEquity Bank:

HomEquity Bank Reports Record Originations Growth

HomEquity Bank revealed a record $41 million in reverse mortgage origination in the month of July. This marks yet another month of record year over year improvement for the reverse mortgage company founded in 1986. July’s year to date originations of reverse mortgages by HomEquity Bank grew by 21% year over year. The solid growth can be accredited to an increase in consumer direct business as well as sustained growth through referral associates including banks and mortgage brokers.

“With the current demographic trends and extended life expectancy we project reverse mortgage originations to grow at 25 – 30% annually over the next few years” said Steven Ranson, President and CEO, HomEquity Bank. “Canadians are living longer, have underfunded pensions and insufficient savings. For many, their house plays a big role in a comprehensive retirement plan”.

As a part of their expansion strategy, HomEquity Bank is getting ready to launch its new Mortgage Broker Direct service in September. The company will offer an official designation for approved brokers, in addition, brokers will receive continuing education (CE) credits for completing the certification, specialized marketing support and attractive compensation.

HomEquity Bank is the only national provider of reverse mortgages in Canada, available to those aged 55 and older.

 

HomEquity Bank sets the record straight on Reverse Mortgages

There’s a lack of information around reverse mortgages, and as more seniors look to this type of financing to help their adult children as well as finance their retirement – it’s time to set the record straight on some misconceptions.

That’s according to HomEquity Bank, a Schedule 1 Canadian Bank offering the CHIP (www.chip.ca) reverse mortgage.

Here, below, are the bank’s ‘Top 10 Facts That Will Make You Change Your Mind on Reverse Mortgages’:

1) Once you are approved for a reverse mortgage, you are approved for life.
2) You can qualify for a reverse mortgage regardless of your credit rating or income level.
3) You will still have equity left in your home. Even after arranging a reverse mortgage, in most cases, HomEquity Bank clients have an average of 50% of the equity left in their homes.
4) You can’t sign final documents without first receiving Independent Legal Advice. That means all Canadian seniors must receive independent counsel before a reverse mortgage can be arranged.
5) Arranging a reverse mortgage is not complicated. Some seniors have described arranging a CHIP reverse mortgage as ‘the simplest financial transaction ever arranged.’
6) Reverse mortgage rates are as low as Prime plus 1.25%
7) Money is of course tax free, and can help you lower your overall tax liability.
8) If one spouse dies, there are no changes to the terms of the reverse mortgage. The loan does not have to be repaid and you don’t have to requalify.
9) Reverse mortgages provide you with an opportunity to diversify your retirement portfolio.
10) We have different rules in Canada when it comes to reverse mortgages, so don’t look to U.S. sources for information.

“More Canadian seniors are looking to a reverse mortgage as a way to supplement their retirement income. For many, it helps them to remain in their homes as they age,” explains HomEquity Bank VP National Sales, Jeff Spencer.

“When it comes to finances, we want to educate Canadians on their options, and clear up misconceptions around the reverse mortgage,” he adds.

How the CHIP reverse mortgage works:

Call today to find out how much you qualify for based on your age and location – 705-717-5598
Access money as a one-time lump sum, as monthly payments or both – it’s tailored to individual needs.
Up to 50% of the home’s value can be accessed and the money is tax free. Unlike a traditional loan, no payments are necessary until it’s time to move or sell the home.

About HomEquity Bank

HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 55 and over, Canada’s fastest growing demographic segment. HomEquity Bank originates and administers Canada’s largest portfolio of reverse mortgages under the CHIP Reverse Mortgage and Income Advantage brands. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.