Mortgage

[FirstCaveman]

A better option might be National Bank's All-in-One account. Reasonable cost to put in place, P+.5% interest rate, you only borrow the amount that you need any given day.

 

[xmontrealer]

And if today's market is the bubble many think, then selling the house after it bursts may not net enough to pay off the loan.

I'm no expert, but to the best of my knowledge:

The lender (CHIP) cannot demand more than the "fair market value" sale price of the home as determined at the time of the sale, even if it is less than the outstanding reverse mortgage balance at the time of sale. This is a major difference as compared to reverse mortgages in the USA. (US reverse mortgages are usually far more risky and costly in general.)

CHIP will only loan a maximum of 55% of a conservative appraisal of the property's value, depending on the location of the home, age of the owners, etc., etc. Obviously the older the owners, the closer to the maximum the loan can be. The average loan is 35% of the property's appraised value. It is highly unusual for the value of a home at the time of the ultimate sale, especially in the GTA, to be less than the outstanding loan balance. So far selling prices in the GTA have usually been considerably higher than the amount required to pay off the reverse mortgage, and the owners or their heirs get to keep the difference.

That said, the interest rates involved are quite high, and if the owners can qualify through sufficiently high actual annual income or very high equity for a regular first or second mortgage or Line Of Credit, those possibilities should definitely be investigated, as well as considering selling the home to generate cash for ongoing living expenses, and downsizing to a smaller home or even a rental.

 

[red]

A Dog could get a loan these days. Take you're dog to the Bank and ask for delivery in cash. Then shoot your dog.

BS

But get life insurance on the dog first

 

[dr tongue]

Anyone have experience with the CHIP reverse mortgage

You are far better off getting a home equity line of credit. Royal's rate is the best at 3%. CHIP is way more expensive. LOCr covers 75@ of your equity. If your home is paid up, you'll be fine.

 

[red]

You are far better off getting a home equity line of credit. Royal's rate is the best at 3%. CHIP is way more expensive. LOCr covers 75@ of your equity. If your home is paid up, you'll be fine.

Are they ok with you not making payments for twenty years?

 

[xmontrealer]

You are far better off getting a home equity line of credit. Royal's rate is the best at 3%. CHIP is way more expensive. LOCr covers 75@ of your equity. If your home is paid up, you'll be fine.

It is unusual for seniors who are considering a reverse mortgage to have income or assets other than their home sufficient to qualify for a home equity line of credit. The banks need to feel comfortable that at least the minimum monthly payments and ultimately the entire outstanding balance of the loan will be paid back without their having to seize the home because the monthly payments and final loan balance cannot be fully paid out of cash resources other than the home itself.

I do agree that a home equity line of credit is a less expensive option, and probably makes more sense generally, as long as the owners do have sufficient income or other assets, that will be ongoing for sufficient time to pay the required monthly payments until they are finally prepared to sell their home, hopefully to pay off their debts and still have cash left over. It is also important that they use the line of credit wisely, and don't blow through it too quickly, forcing a sale of their house before they had originally planned when setting up the line of credit.