Seniors want to stay at home but must renovate

renovate with a reverse mortgage

renovate with a reverse mortgageHomEquity Bank teams with Ipsos Canada to study top renovations required and how a reverse mortgage could be the answer.

TORONTO, April 6, 2016 – Most Canadian seniors want to remain in the family home as they age, but often must renovate and retrofit areas of the home as part of aging in place.

That is according to the results of a study conducted by HomEquity Bank and Ispos Canada, where 300 Canadian homeowners were surveyed from March 15th to 18th 2016.

The study focused on Canadians aged 55 and older and asked if renovations were needed to remain in their home, as well as what type of renovations and retrofits would be necessary and how they would be financed.

Here, below, are the key findings of the study:

  • 58% of respondents stated that improvements would be required.
  • 46% stated that minor renovations would be required.
  • 11% stated that major renovations would be required.
  • 44% of respondents who stated that improvements would be required indicated that their kitchens and/or bathrooms would have to be renovated to improve accessibility.

The study also showed how respondents planned to finance improvements: 62% plan to draw on savings; 25% plan to arrange a reverse mortgage or HELOC; 11% plan to utilize investments; 9% plan to sell existing assets; and, 7% plan to use other types of loans.

Accessibility remains the top issue when it comes to seniors remaining in the family home, according to Vince Agovino, Executive Director, AGTA Home Health Care, a company providing products and services – from Personal Support Workers (PSW) to home renovations – for barrier free living. In fact, the top areas his company addresses include: improving accessibility from the main floor to the second floor; improving accessibility from outside the home to inside the home; and, renovating the home so there is a full bathroom on the main floor.

Mr. Agovino founded the company in 2000, following his personal, and challenging, experience of helping his aging grandparents remain in the family home.

“It was very difficult as my grandparents aged. It was difficult to find the products they needed, such as bathroom safety equipment, and especially hard to find everything we needed in one place. We also needed a PSW and needed to explore financing. I discovered we were not unique in this situation,” he explained.

That led to the launch of AGTA Home Health Care, which, Mr. Agovino notes, strives to address and solve all aspects of barrier free living.

AGTA Home Health Care’s most common renovation projects include:

  • Improving accessibility from the main floor to the second floor, via a stair glide, starting at $3,000.
  • Improving accessibility from outside the home to inside, via a ramp, starting at $3,000.
  • Creating a full bathroom on the main floor of a home, starting at $10,000.

The February, 2015 Retirement Study of Canadians aged 55+, conducted by HomEquity Bank and The Brondesbury Group, detailed 47% of pre-retired and 56% of retired respondents stating that ‘staying in my home is critical for my quality of life.’

HomEquity Bank, the only Canadian bank working exclusively with seniors, helps elderly people remain in their homes through its CHIP reverse mortgage solution. Seniors can supplement their income via reverse mortgage monthly or lump sum payments.

About HomEquity Bank

HomEquity Bank is a Schedule 1 Canadian Bank offering the CHIP reverse mortgage solution www.chip.ca. It was founded 30 years ago as an annuity based solution addressing the financial needs of Canadians who want to access the equity of their top asset – their home.

About Ipsos Canada

Ipsos is one of the world’s largest independent market research companies. Its commitment to driving the industry with innovative, best in class research techniques that are meaningful in today’s connected society is a primary goal. www.ipsos.ca

For this survey, a sample of 301 Canadian homeowners aged 55+ was interviewed online via the Ipsos I-Say panel. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the age 55+ population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/ – 6% percentage points, 19 times out of 20, had all Canadian homeowners age 55+ been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

SOURCE HomEquity Bank

 

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Related article at BNN

CHIP Mortgage Trust Announces Redemption of Medium Term Notes

Homequity Bank

Homequity Bank

CHIP Mortgage Trust (“CMT” or the “Trust”) announced that it will redeem $100,000,000 principal amount of Series 2011-1 senior medium term notes (the “Notes”), on a pro-rata basis, on January 5, 2016. The redemption price will be $101,922,934.25, which includes accrued and unpaid interest to the Early Redemption Date. Further notice(s) may be issued to redeem the remaining $51,700,000 principal of the Notes prior to the expected final payment date of February 1, 2016.

The funds used to redeem the Notes were sourced from a combination of cash flow generated in the normal course of business, and from the issuance of Guaranteed Investment Certificates (“GICs”) by HomEquity Bank. HomEquity Bank has increased the diversification of its sources of funding, adding three major distribution relationships in the last 12 months.

“We are extremely satisfied with our ability to redeem the Notes early,” said Steven Ranson, President and Chief Executive Officer. “HomEquity Bank’s access to funds through the issuance of GICs has significantly enhanced our liquidity management capabilities, and has provided additional financial flexibility in our funding operations.”

Forward Looking Statements

CMT from time to time makes written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including, in particular, forecasted mortgage origination growth, as well as the likelihood of its success in developing and expanding its business. Forward–looking statements are typically identified by words such as “will”, “should”, “believe”, “expect”, “forecast”, “anticipate”, “intend”, “estimate”, “plan”, “may” and “could”.  These statements may be included in CMT’s annual and quarterly reports, regulatory filings, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of CMT. The uncertainties and contingencies include, but are not limited to, risks related to capital markets and additional funding requirements, credit and underwriting risk, fluctuating interest rates, asset quality and rates of default as well as those factors discussed in the documents filed on SEDAR. Actual results may differ materially from those expressed or implied by such forward-looking statements.  CMT does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time, except as required under applicable securities legislation.

About CHIP Mortgage Trust

CMT is a wholly owned subsidiary of HomEquity Bank. HomEquity Bank is a Schedule 1 Canadian bank and 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.

CMT, a special purpose entity, finances a portion of HomEquity Bank’s reverse mortgage portfolio, which totalled approximately $1.9 billion as at September 30, 2015, with medium term notes.

SOURCE CHIP Mortgage Trust

For further information: Steven Ranson, President and Chief Executive Officer (416) 413-4663, or John Garofano, Treasurer (416) 413-4674.

HomEquity Bank

1881 Yonge Street, Suite 300
Toronto,ON M4S 3C4

For other bank inquiries:
Toll Free: 1-866-522-2447
Local: 416-925-4757

Reverse Mortgage Study

Homequity Bank

reverse mortgages

HomEquity Bank teams with Equifax Canada to study Debt in Retirement

Mortgage debt amongst seniors is increasing right across Canada, and for those aged 70 and older, it has increased 12 percent in comparison to 2013. That is based on the final results of a debt in retirement research study carried out by HomEquity Bank and Equifax Canada.

The research was carried out in July of 2015 and concentrated on Canadians aged 55 and older. It analyzed the main categories of debt including: mortgages, lines of credit, bank loans, car loans, credit cards and retail cards. The study provided a comparison period of 2013 and 2015.

“At HomEquity Bank, we’re not surprised to see the results of this study. Every day, we hear from seniors who are having difficulties with debt. It can be due to insufficient pensions, the high cost of living or costly health care issues, but debt is increasingly a concern for many seniors,” states Yvonne Ziomecki, SVP, HomEquity Bank.

Conclusions of the study:

Mortgage debt is growing fastest in the Greater Toronto Area and Quebec and less so in Alberta and British Columbia
In 2015, 16.5% of people aged 55 and older are holding a mortgage. This is an increase of 10% from 2013
The average mortgage balance for Canadians aged 55+ grew by 11% from $158,000 in 2013 to $176,000 in 2015
The average mortgage balance is highest in the 55 to 60 age group, at $189,000, and lowest for the 75+ age group at $134,000
Seniors aged 71 and older with a mortgage have an average balance of $140,000
Overall debt for those 70+ has increased by 12% between 2013 and 2015 versus only a 4% increase for those under 70.

“It’s shocking to find Canadians 71+ are still carrying hefty mortgages,” notes Laurie Campbell, CEO, Credit Canada Debt Solutions. “By this age, they are fully retired and there’s no opportunity to increase their income.”

In fact, the study is showcasing a more relaxed attitude towards debt, she adds, “and this can jeopardize retirement.”

The best case scenario is to “have your financial cards in good order in your early 50s and mortgage free by retirement,” Campbell explains.

HomEquity Bank, the only Canadian bank working specifically with seniors, helping elderly people remain in their homes through its CHIP reverse mortgage solution. Seniors can supplement their income via reverse mortgage monthly or lump sum payments or a combination of both. HomEquity bank also mortgages new home purchases allowing people to purchase a more expensive home without mortgage payments.

For more information on reverse mortgage products, and how they work, contact Michael Curry at 705-717-5598 or 647-559-5049 or use the contact form HERE.

About HomEquity Bank

HomEquity Bank is a Schedule 1 Canadian Bank offering the CHIP reverse mortgage solution. It was founded 28 years ago as an annuity based solution addressing the financial needs of Canadians who want to access the equity of their top asset – their home.

About Equifax

Equifax empowers businesses and consumers with information they can trust www.equifax.ca. A global leader in information solutions, Equifax leverages one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.

SOURCE HomEquity Bank

Reverse Mortgages – Good or Bad Idea?

chip reverse mortgage

A lot more Canadians are using the economic value of their own property to make up for financial shortfalls, as they head towards retirement life. Many over the age of 55 find themselves house rich and cash poor. Numerous senior Canadians are on their way into retirement with either too much personal debt, or not enough savings, or in many cases both of those.

As they leave behind the labor force their earnings decrease but their financial obligations continue. So many are facing this scenario and managing it becomes stressful. Many property owners in this situation ask themselves if a reverse mortgage is the answer, since it would allow them to take funds out of their home, and continue to live there. Reverse mortgages can relieve financial challenges and allow seniors to live a little, do some renovating, or maybe give their children financial help.

Reverse mortgages are a good idea, but they should only be taken into consideration after all alternate options have been explored. Reverse mortgages do carry a higher rate of interest than a conventional mortgage although not much different from second mortgages or lines of credit. They do erode the equity in your principal investment, which in turn might need to be sold later. If you are prepared to overlook this, you are probably under financial pressure or perhaps you are not living the life you want after years of working hard.

HomEquity Bank offers reverse mortgages in Canada, the greater part of which are in larger more expensive cities like Toronto and Vancouver. The bank provides them through the Canadian Home Income Plan (CHIP).

Here is how reverse mortgages work:

To qualify you need to be over 55 and own a home, you can get up to 55 per cent of its value depending on your age. The money is tax-free and you do not have to pay anything back until you want to sell your house or you die. Then the principal and accrued interest is due in full, within six months or at closing of the sale of the home.

The rate is somewhat higher than a conventional mortgage mortgage with an “A” lender. HomEquity is offering a 5-year fixed reverse mortgage at 4.99 per cent compared to rates under 3% for a first mortgage to clients with excellent credit. After the five-year term is up, the rate is renegotiated and will depend on market conditions at that time.

The real cost is very easy to forget about as you are not making any payments unless you want to. HomEquity Bank, says their typical consumers are in their early 70s and borrow on average $110,000, and usually sell their home within six to eight years.

Ziomecki says the process involves a home appraisal and those with mortgages would not be turned down, though they would be able to borrow less. Applicants must have a lawyer to ensure they understand what’s involved. HomEquity encourages the entire family to get involved to avoid acrimony later.

HomEquity sees four types of customer:

Debtors (35%): They have poor money management habits and may be maxed out on department store and bank-issued credit cards. They have large credit lines and in some cases huge mortgages. It adds up to a reduced credit rating, and they often cannot obtain additional financing from their bank.

Spenders (30%): They desire a much better lifestyle without having the repayments. It could perhaps be a holiday home or a significant home refurbishment. They may not want to have a credit line given that they would have to make a payment each and every month.

Cash poor (17.5%): This group cannot make ends meet. Their pension income and savings are moderate. Many are single women or widows who did not work outside the home. They need the extra cash to stay afloat.

Unanticipated needs (17.5%): This could be big bills or a desire to deliver an early inheritance to their children. If the latter, giving the money makes them feel good.

HomeEquity had a banner year in 2014. Its reverse mortgage business increased 23 per cent and was worth $309 million. As more Boomers head into retirement, the company says it expects the growth to continue.

CHIP Reverse Mortgage Facts and Misconceptions

Facts and common misconceptions about Home Equity Mortgages

– As soon as you are approved for a reverse mortgage in Canada, you are accepted for life.

– Anyone can easily meet the requirements for a home equity loan no matter what your credit rating is or your income level.

– Most individuals will still have equity remaining in their residence when they decide to sell it and in generally HomEquity Bank customers average around 50% equity kept in their property.

– Nobody is allowed to sign final documentation for a reverse equity mortgage without having first received Independent Legal Advice from their lawyer. This requires all Canadian seniors must receive independent counsel before a reverse mortgage can be prepared.

– The CHIP mortgage program is not complicated, and many people have characterized setting up these home loans as one of the least complicated financial transaction they have ever arranged.

– Reverse home loan rates are not as expensive as many people think, and can be as low as Prime plus 1.25% they can be less expensive than a line of credit or second mortgage.

– The money is always tax free because it is a loan and not actually income as defined by the Canada Customs and Revenue Agency.

– In the event that one spouse passes away, there will be no changes to the terms and conditions of the equity financing arrangement. The equity does not have to be repaid and you do not have to move or re qualify.

– Using the equity in your home can provide an opportunity to diversify your retirement portfolio. There are investment opportunities which pay higher returns than the interest on a CHIP mortgage. This difference can create an income over and above the reverse mortgage payments received.

– If part or all of the CHIP funding is used for investment, there is an option to repay the interest each year and preserve your equity.

– The interest cost associated with a CHIP reverse equity mortgage are also offset somewhat by rising home values.

The rules in Canada are different when it comes to this type of financing, please do not look to U.S. sources for information. For Canadian relevant information visit: www.barriemortgagebroker.ca/reverse-mortgages/

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

home equity mortgage

For more information on The Canadian Home Income Plan you can visit the Canadian Government’s website: www.cmhc-schl.gc.ca