How a CHIP Reverse Mortgage Can Help You Cover the Costs of the Holiday Season.

Mortgage Tips Steve Marshall 18 Dec

As you’re undoubtedly aware, the holiday season can be a very expensive time. Not only are there gifts to buy, but there can be a host of hidden extra expenses – gift wrapping, postage, and more take-out meals than normal for a start.

It’s therefore no surprise that many Canadians find themselves struggling to afford these extra costs; many wind up paying for the holiday season with their credit card. According to a study by lowestrates.ca, 63% of Canadians expect to do this, with just over half of those carrying the balance into the new year.

And since credit cards have some of the highest interest rates around, they can easily lead consumers into a spiral of debt. Today almost a third of Canadians have outstanding credit card debt.

how a chip reverse mortgage can help

If you’re worried that you’ll overspend on your credit card this holiday season, the CHIP Reverse Mortgage could be for you. The CHIP Reverse Mortgage is a financial solution for Canadians over the age of 55 that allows you to access up to 55% of your home’s value in tax free cash.

The money can be used for whatever you want. This could include consolidating debt – including credit cards – renovating your home, or increasing cashflow at certain times of year, such as the holiday season.

Lower Interest Rates:

The CHIP Reverse Mortgage has a number of benefits over regular credit cards, with the first being lower interest rates. While credit cards can have interest rates between 12 and 23%, the CHIP Reverse Mortgage has rates of 4-7%. If you are using a credit card and don’t pay it off in full, the holidays could cost you less if you used the funds from a reverse mortgage instead.

No Monthly Repayments:

Another advantage the CHIP Reverse Mortgage has over credit cards is that it doesn’t require monthly repayments. When you take out a Reverse Mortgage, you don’t have to pay anything until you leave your home.* Without the need for monthly debt repayments, your monthly cashflow will increase, helping you avoid starting the new year with holiday debts to pay.

Cover the Cost of the Holidays for Years to Come!

The CHIP Reverse Mortgage doesn’t have to support your cashflow only this holiday season, but funds can be drawn on time and again when needed.

For example, say you initially took out the CHIP Reverse Mortgage for $25,000, then later down the road you wanted to enjoy some more of the cash in your home. Provided there’s enough equity left, you can take a subsequent advance of a minimum of $5,000 – all without repaying the initial amount first. As with the initial lump sum, this money can be spent on whatever you want, whether that’s covering the costs of future holiday seasons, completing long wished-for home renovations, or supporting adult children with the down payment for their own home.

The holidays can be a stressful time, especially if you feel you have to use your credit card to cover the costs – costs which are often carried into the new year. With the CHIP Reverse Mortgage, however, you can pay for the holidays this year and for years to come, relaxed in the knowledge that you’re enjoying lower interest rates and don’t have to pay back what you borrow until you leave your home.

For further details and to see how the CHIP Reverse Mortgage can help you, please contact your DLC Mortgage Professional.

*You must continue to pay your property taxes and insurance and maintain your home in good condition.

Written By: Agostino Tuzi
Post Sponsored by HomeEquity Bank

Rate Holds Explained

Mortgage Tips Steve Marshall 15 Dec

If you shopping for a home, or have worked with a mortgage professional in the past, you’ve most likely heard of rate holds before. If not, it is something that every potential homeowner should be aware of. This is especially true for the application process as it has some great benefits for active shoppers.

If you are not familiar with the term, a ‘rate hold’ refers to locking in a specific mortgage rate for a limited period of time. This is offered through most lenders, assuming you are a potential client looking to purchase a home and need a mortgage. They are not eligible for individuals that are refinancing their mortgage, or looking to transfer it to another lender.

If you qualify for a rate hold, there are a few things you should know – from restrictions to benefits! The first and most important is that rate holds are typically only offered for a period of 90-120 days. So, once you have created your mortgage application with a broker and submitted it at the interest rate that best suits you, that rate will be protected for 90-120 days while you shop.

A rate hold is not a commitment. It does not force you to work with that lender, or the mortgage broker who submitted it. It also does not affect your future chances of receiving approval down the road. Instead, it simply guarantees that rate for you, if you find a home you want to purchase and sign the mortgage agreement before the rate hold is up.

This can be truly beneficial in volatile markets or those with high competition. If you submit your application to a lender for a fixed rate of 2.49% on a five year term, but while you are searching for your perfect home that rate moves up to 2.99%, the rate hold will protect you and allow you to still sign at 2.49%. This can mean huge savings!

For instance, if you are looking for a standard $500,000 mortgage (25 years amortization, fixed-rate, 5-year term), your monthly payments would be $2,237.35 at 2.49% interest. This would jump up to $2,363.67 per month at 2.99 percent. This is a difference of $126.32 per month or $1,515.84 annually; which can really add up on a 25-year mortgage!

Another benefit is that, if the rates go down, it does not stop you from taking advantage of the lower offer. Instead, it protects you from rate increases after you’ve determined your budget and are in the process of purchasing a home.

It is also important to note that, once the rate hold expires after 90-120 days, there is nothing stopping you from submitting another rate hold. It will just be subject to the interest rates as they stand on the day of submission.

Reaching out to a mortgage professional can help you better understand the current rates and benefits of a rate hold. In addition, they can help you find the best option to suit your needs thanks to their connections with hundreds of lenders! Why wait? Contact a DLC Mortgage Professional today.

It’s All About The Property

Mortgage Tips Steve Marshall 9 Dec

When your mortgage application goes through the approval process, they are not only looking at you, but also the property in question. In fact, sometimes when an application is denied it has nothing to do with you, and everything to do with the property.

To improve your chances of success when it comes to financing, there are three main things to consider:

The type of property
The location of the property
The usage of the property

Let’s take a look at some of the specifics for each of these considerations.

TYPE OF PROPERTY

There are various types of properties when it comes to home ownership – detached houses, semi-detached, condos, townhouse, duplex, carriage or heritage home. Depending on the type of property you have chosen, there may be specific considerations.

CONDOMINIUMS

When it comes to condo properties, the lender (and potentially the insurer) will consider the age of the building. In addition, they will look at maintenance history (or lack thereof), as well as the location for marketability. Some lenders may have stipulations that limit themselves to buildings with a certain number of units, or past a certain age.

If the condo you wish to buy is lacking a depreciation report, has a low contingency fund or large special levies pending, these will be red flags for the lender. Any of these situations will require a more thorough review. These items should also serve as strong considerations for you as it indicates the management (or lack of) for that condo building.

ADDITIONAL UNITS

If you are looking at a property with additional units, it is important to consider that buildings with over four units, are considered a ‘commercial’ property and would be evaluated on that basis.

HERITAGE HOMES

Whether registered or designated, heritage homes require a more detailed review and often come with special considerations for financing.

LEASEHOLD OR CO-OP PROPERTIES

These properties also have specific requirements, particularly when it comes to the maximum loan-to-value which means they will require a larger down payment. These types of properties also typically call for additional documentation, and may have varying interest rates.

If you shift from a standard condo to a lease-hold property, your down payment amount will likely change. If you want to move to a small rural town or a small island, there will be fewer options. In addition, you may have to pay a higher rate as well as provide more documentation on the property.

LOCATION CONSIDERATIONS

You’ve heard it before – location, location, location! Location matters just as much to the potential homeowner as it does the lender. Some things to keep in mind when it comes to location include:

POTENTIAL RESALE VALUE

If the location limits the potential resale value for the building, lenders may not provide financial approval on that property. This is due to the increased risk if the borrower defaults. In that case, the lender may not be able to foreclose the property and get enough funds back due to the low resale. That said, some lenders may allow these properties but they might reduce the loan amount if the building is located outside of a major market area, or they may add a premium to the interest rate.

RURAL CONSIDERATIONS

For properties with water access only, or with no access to municipal utilities (heat, water, electricity, sewage), there will be additional requirements to assess lender risk. These requirements might include: Insurance coverage, water testing, septic tank inspection, seasonal access and condition of the property.

TRANSFER TO ANOTHER PROVINCE

It is also important to note that if you purchase a home in one Province and are transferred or move to a different province, some lenders won’t be able to port the mortgage due to being provincially based.

usage considerations

The use of the property can include things such as personal, investment, recreational, agricultural and also consider previous activities. A few things to keep in mind are:

CONDOMINIUMS

If you are looking at purchasing a condo on a property that has either a commercial component in the building (such as shops on the first floor), or allowable space in the unit for businesses (live/work designation), you may have limited lender options. In some cases, lenders will avoid these types of properties at all costs, while others may require approval from the insurer (i.e. CMHC).

RENOVATION REQUIRED

If the property requires renovations, the extent of the upgrades, as well as the property value will be taken into consideration.

PREVIOUS GROW-OPS

Homes that previously existed as grow-ops, have special lending options. These typically come with higher interest rates and costs due to decreased value.

RENTAL SUITES

For owner-occupied homes that contain rental suites, it is important to consider potential rental income. If the house is purchased for investment, rental income is automatically considered. This can result in a different interest rate than simply an owner-occupied dwelling. In these cases, the rental income can also increase the resale value of the property. However, an appraisal of the property must be conducted and reviewed to ensure the condition. This will also uncover whether any renovations were completed to add value.

SECOND PROPERTIES

Purchasing a second home for recreational use will require a review to determine if it is seasonal or year-round access.

Before you begin your home search, it is best to discuss your future plans with a Dominion Lending Centres Mortgage Professional. This will ensure you receive accurate information to understand the specific requirements your potential property might require. Seeking expert advice early on will also give you ample time to find the right fit! This will also ensure you can submit a full financing review before subject removal on a purchase.

5 Things to Know Before Buying a Rural Property.

Mortgage Tips Steve Marshall 23 Nov

As cities continue to grow bigger and busier, a rural home beyond those limits can seem like a dream come true! However, before you dive into country living, there are a few things you should know! Especially, how different it can be to qualify for a mortgage.

1. CHECK THE ZONING

When it comes to buying rural property, it is important to check how the property is zoned. This is vital! Zoning will determine how you are able to use the land, as well as the types of buildings that are allowed and where they can be located. Is the property zoned as “residential,” “agricultural” or perhaps “country residential”?

Zoning could affect the lenders available to you and what you qualify for, as well as what you can do with that property. Differences in lending and foreclosure processes, has caused some lenders to be hesitant with financing mortgages in agricultural/country residential zones.

2. PROPERTY BOUNDARIES

Once you have determined how a property is zoned, it is important to look at the land. Requisitioning a survey early in the process will help mark the exact boundaries of your property to avoid future disputes. This is also a good time to get an appraisal done on the land and its value.

3. CONSIDERING THE LAND AND YOUR MORTGAGE

What many borrowers don’t realize is that land has a drastic effect on mortgage qualification and what you can borrow. In fact, most lenders will mortgage: (1) house, (1) outbuilding and up to (10) acres of land. If you have a second building or extra land that is being purchased, you will need to consider additional funding on top of your typical 5% down payment.

4. WATER AND SEWAGE

When it comes to rural living, many people draw water from private wells and utilize septic tanks for sewage. To ensure everything is safe and in working order, it is a good idea to have an inspection done on the septic tank and water quality as a condition on the purchase offer. Due to the nature of these properties, be advised that inspections may cost more than it would in the city. However, it is important as lenders may request potability and flow tests!

5. COVERAGE MATTERS!

Coverage matters, especially when you are living away from the city. When it comes to rural properties, there are two types of insurance that you should consider:

Home Insurance: When it comes to rural living, this can be more expensive than city homes due to the size and location of the land and distance from fire stations and hydrants.
Title Insurance: This is vital for rural purchases and will protect you from unforeseen incidents with the deed or transfer. It will also alert you to any improper previous use of the property (such as dumping for waste).

If you are thinking about purchasing a home in a rural area, be sure to speak to a Dominion Lending Centres mortgage professional before you do anything. They can often recommend a realtor who specializes in rural properties and knows the area best. A DLC Mortgage professional can also help ensure you understand any differences in the mortgage process and qualifying that come with rural purchases.