Many people get the reno bug…wanting to improve your home can make a lot of sense from both a “living in it” point of view and a financial one.
Two of the most important areas for potential buyers are the Kitchen and Bathrooms…this also usually goes along with what most people want to renovate! The trick is to update to the latest trends without breaking the bank. Countertops, appliances, sinks and cupboard hardware are good places to start…new cabinetry, changes in layout etc. should be secondary…budgets can quickly enter the realm of never getting it back. Other areas many people look for are modern heating/cooling systems, increased efficiency and high tech.
More here: Link
So how do you pay for it? The Bank would tell you to take out a “Home Equity Line of Credit” which they make sound so easy…and it is, until you try to pay it off. Lines of Credits are a Bankers best friend, because they really are the “Never Never Plan” where you will find in 3 or 4 years your balance hasn’t gone down, yet you have paid the interest on it routinely. You are always better to look at refinancing your mortgage and taking out the required funds…then focus on paying your whole mortgage off…better yet, save up the money and pay cash!
Michael Anthony Lloyd
Fantastic new time lapse video of Vancouver…
The Baby Boomer generation is growing older and many of them are sitting on huge amounts of equity in their homes, yet their retirement planning may not have kept pace with their cost of living. Many are living longer than ever before, but what kind of life do they have? Others are living ok, but are unable to help their kids or Grand kids they way they would like to. House rich and money poor comes to mind.
Many of these people may have a great relationship with their bank (“I’ve dealt with the X Bank for 50 years!, they look after me!”), yet no longer qualify for lending from that very bank due to the recent changes in mortgage rules.
New solutions to this problem are required, and they are appearing.
In the past we used to try to setup lines of credit secured to the home as a means to give people more control and access their equity. We still do this for some, however, now we have access to a specific lender who does nothing but 55 plus mortgage lending. They have numerous programs including;
- downsizing & financing; Now seniors can sell their current home, buy their smaller home and instead of using all of their equity to pay cash for the home, take out a mortgage which has optional payments. Meaning their cashflow is in their control again.
- Equity takeout of their current home; help their kids with an eto of their residence, or keep the cash for themselves. Payments again are optional making cashflow easier.
- Monthly cash out payment to improve their cashflow with no repayment until they sell.
These are only 3 of the many options available. The best part? Approval is based only on their age and property…no income or credit verification required.
More details here; Reverse Mortgage Myths
We can help you review this program for yourself or your parents/grandparents.
Michael Anthony Lloyd
The Big Banks didn’t get to be Big without thinking about every angle they can bring in more profit. Another detail you will likely be unaware of is the new “Collateral Charge” which looks shiny and nice on the outside, but much like the Hotel California, “you can check out, but you can never leave!”
Well, you can leave, but it will cost you.
This charge is sold on the benefit that if the client ever wants to borrow more money, they can simply go to the branch and they will use this collateral charge to secure those funds against your home instead of having to get a regular loan or refinance their mortgage (saving legal fees). The trouble is other lenders won’t allow you to transfer your mortgage from that lender due to this charge, so then you will have to go to the lawyers and refinance…in other words, the Bank is trying to make it more difficult to leave, lessening your negotiating power.
There is a great article here discussing it in depth: Pros & Cons of Collateral Mortgages
As always, there is much more to talk about than just the rate of a mortgage.
Michael Anthony Lloyd
One of the biggest mistakes Canadians make on a regular basis is judging mortgages strictly on the lowest rate…this is one of the least important aspects of a mortgage in fact. For those who watch the netflix show “House of Cards” it is in the details of the mortgage where the real gain or loss will occur.
For example, did you know that all of the major banks have made dramatic changes to how they calculate their mortgage penalties on fixed rate mortgages? In the past they would merely work out what they would lose between your locked in rate and the current “going” rate and you would pay the difference on your mortgage balance. While this calculation was always murky and hard to nail down to the exact dollar, it was generally understood by most Mortgage Experts at least. Now the “Big Five” have figured out a quiet way to make sure their profits are maximized. By retooling the calculation they have maximized their returns on all of these penalties…and the majority of mortgage borrowers have no idea.
For a detailed discussion on how these penalties work click here Bank Penalty article G&M
With the average mortgage term in Canada only lasting about 3 years before we break the term, this alone will have a massive impact on Canadians…yet the first question people always ask is “What’s your best rate?”
We do have ways around this situation…more soon.
Michael Anthony Lloyd
Many times purchasers will find a home that almost meets what they want, but needs just that little bit extra, from paint & carpet, to finishing a basement, to adding a suite, to modernizing a kitchen or bathroom…we’ve all seen it! The problem is that with most Canadians having put all or most of their money into the down payment for that house, they can’t afford to make those changes. At the very least they may have to wait to save up to make them. We have come up with a solution for this very situation…The Canadian Home Renovation Plan or CHRP! We are able to have your additions/upgrades/changes added to the mortgage so that you can make the changes you want now, and have it included at the same low rate as the mortgage, keeping your cash flow low and your new home satisfaction high! You won’t need an expensive unsecured Line of credit, credit card or loan…this money will be financed with your mortgage. Approved by CMHC, Genworth & Canada Guaranty, Canada’s three Mortgage Insurers to the Banks and lenders, this is a real program you can take advantage of now.
Check out a sample report from one of our Pre-approved homes: click here We work with a select group of Realtors and Mortgage Brokers across Canada to bring this to all Canadians. For more information please fill this in: