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This information is courtesy of Lisa Manwaring of Southwest Mortgage

 

There is a ton of speculation and myth about these types of mortgages. They have come a LONG way in the past few years. These types of products can help a certain client!! Here is some common misconceptions regarding what could be a great assistance to a senior in need of some financial assistance. We can assist with these types of transactions … So if you have questions … please give me a call. I would LOVE to hear from you!

REVERSE MORTGAGE – SOME COMMON MISCONCEPTIONS

 

The words reverse mortgage carry some negative connotation. What does it really mean? What makes reverse mortgage different than a regular or demand mortgage in Canada? There are no payments required if 1 applicant lives in the home. Payments can be made if they wish, they are truly optional.

No medical required and limited income and credit requirements.
Clients can receive up to 55% of the value of their home in tax free cash, depending primarily on their age, property type as well as location.

 

COMMON MISCONCEPTIONS & OBJECTIONS:

 

I heard they were restrictive and bad for seniors.

Much of the negative press around reverse mortgages originated out of the U.S. The rates, fees, and restrictions are quite different from what is offered in Canada. The reverse mortgage providers in Canada follow the same chartered bank rules as other major lenders.

The bank will own my house.

This is only a mortgage; the title and deed remain in the client’s name. The owner will not be asked to move, sell, or make payments for as long as at least 1 applicant lives in the property.

I’ll lose all my equity.

The maximum the lender can finance is 55% of the value of the home. The average advance is more like 35% of the value, leaving ample equity to fall back on. If the real estate market increases at an average of about 2% to 2.5% per year over time, clients will find their home value increasing just as much over time as the balance owed. 

 

The costs are too high.

The closing costs are the same as a regular mortgage, approximately $1,800, includes the appraisal and lawyer fee.

A line of credit is better and cheaper.

A line of credit is a great solution for someone with good credit, cash flow and most importantly someone with a regular income.

I paid off my mortgage, I don’t want more debt.

Leveraging money from your home is not debt. It’s the equity accrued over the duration of ownership. Only the interest is debt.

Why are the rates higher than a regular mortgage?

Other lenders can lend out money at lower costs. This is because they have other services to sell the client to help recoup their cost. The regular mortgages also require a regular repayment frequency; thus, the lender is constantly receiving funds back to re-lend.

I heard they have high penalties and you can’t get out very easily.

This is well suited for seniors looking to keep the reverse mortgage in place for 3 or more years. There might be other solutions for a timeline that is shorter. Penalties are always waived upon death of the last homeowner. Penalties are reduced by 50% if selling and moving into a care facility.

I don’t need money very much so it’s not worth it.

The newest program offered is called Income Advantage. It allows clients to access money on their own timeline, when they need it or a pre-determined auto-advance. Borrower only pays on the amount advanced. The minimum advance required is $25,000.

 

If you’d like to talk to see if a reverse mortgage is a good fit for you, please don’t hesitate to reach out to a Dominion Lending Centres mortgage professional.

 

 

 

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Global News

Jill Slattery

 

B.C.’s premier has announced the province is lifting the 15 per cent foreign buyers tax for anyone living in Metro Vancouver with a work permit.

 

The move is an effort to encourage people to come to the province. Those who live, work and pay B.C. taxes will now be exempt from the additional property transfer tax.

 

“People who are seeking refuge around the world should be able to find safe-haven here in our province. We believe the best and the brightest should be able to come to B.C.,” Clark said during a media scrum at the Chinese New Year parade in Vancouver Sunday.

 

It appears the move is in response to Donald Trump’s executive order banning travel and immigration into the U.S. for people with passports in seven Middle East and North African countries.

 

The foreign buyers tax was implemented in July 2016 with an enormous amount of support from B.C. residents.

READ MORE: B.C. foreign buyers tax really did yank down Vancouver home prices: BMO


It has since contributed to falling residential real estate sales and a drop in prices, the first time in several years Metro Vancouver has since a reprieve from a skyrocketing market.

 

As of 2015, there were almost 15,000 work permit holders through the Temporary Foreign Workers program in B.C.

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Vancouver home prices fall as region becomes 'buyer's market'

 

Jenni Sheppard Jan 12, 2017 3:00 am

Daily Hive Vancouver


Real estate figures supplied to Daily Hive seem to show something is stirring in Vancouver’s red hot property market.

According to figures provided by Royal LePage, home prices in Vancouver in the last three months of 2016 actually fell by 0.4%, compared to the previous three months.

 

That doesn’t sound like much, but by comparison, in 2015, home prices in the fourth quarter were up by 9.8% compared to the previous quarter.  In a release discussing its latest House Price Survey and and Market Survey Forecast, Royal LePage said home pricing across Greater Vancouver has began to moderate.

 

The company found “bruised consumer confidence” was to blame, causing all but condos to move from a seller’s to a buyer’s market, in just one quarter.

‘More power at the bargaining table’

Randy Ryalls, General Manager, said this resulted from a lack of affordability and quality homes, as well as market uncertainty due to conflicting governmental intervention.  “This has led to a decrease in competition for listings across Greater Vancouver, giving rise to new market conditions where prospective homeowners have more power at the bargaining table, causing prices to soften,” he said.

 

As well, Royal LePage estimates it is the critical lack of available housing, rather than government policies regulating demand and foreign buyers, that has had most impact.  “Market characteristics have melded to create a perfect storm where prospective homeowners are unable to find adequate affordable property due to an extreme lack of supply, and have thus refrained from putting their own homes on the market, causing sales activity to slow further,” stated the release.

Aggregate home price reaches $1,230,718

That all sounds like good news for potential buyers. But while you may have a little more power, you’ve still got to have some big bucks to start wielding that newfound influence.  Whilst Royal LePage found home prices in Greater 

Vancouver began to moderate at the end of 2016, year-over-year figures have kept rising, due to home sales earlier in the year.

 

According to the release, the aggregate home price in the fourth quarter was still $1,230,718, an increase of 25.6% compared to the same period of the previous year. The aggregate home price is the average of the median prices for each property type: condominiums, bungalows and two-storey homes. 

 

Royal LePage found the median price of a condo in Greater Vancouver in the fourth quarter of 2016 was $529,912, a rise of 15% from the same time the year before. Meanwhile, the median price of a two-storey and a bungalow in Greater Vancouver rose to $1,604,757 and $1,386,240, an increase of 27% and 28.8 % year-over-year, respectively.

Across Greater Vancouver – and the whole of Canada – the biggest year-on-year home price rise was seen in West Vancouver. In the fourth quarter, aggregate price of a home in West Vancouver shot up by 32.8% to $3,573,148 compared to the same time the year before.

‘Sanity returns to the marketplace’

There is more good news for homebuyers on the horizon, as Royal LePage forecasts home prices across Greater Vancouver will drop 8.5% in 2017.

 

“It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016,” said Ryalls.

 

However, Ryalls said, conditions could worsen and prices could fall even further if buyers’ feelings about the critical lack of available housing does not change.

 

Royal LePage also predicts foreign investment in Greater Vancouver will keep falling due to the foreign buyers tax and new, stricter requirements on currency conversions in China.

Greater Vancouver home prices in Q4 2016

All data provided by Royal LePage.

 

Vancouver

Aggregate: $1,506,498

Condo: $647,286

Bungalow: $1,548,976

Two-storey: $2,603,250

West Vancouver

Aggregate: $3,573,148

Condo: $984,258

Bungalow: $3,052,483

Two-storey: $3,984,852

North Vancouver

Aggregate: $1,391,197

Condo: $508,217

Bungalow: $1,563,629

Two-storey: $1,690,473


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