Reverse Mortgage

 

Transfer Mortgage

If you're a homeowner in Canada who's looking to sell your current property and purchase a new one, you may have heard of a transfer mortgage. This type of mortgage can be a convenient option for homeowners who want to move without paying off their existing mortgage. In this article, we'll explain what a transfer mortgage is and how it works in Canada.

What is a transfer mortgage?

A transfer mortgage is a type of mortgage that allows you to transfer your existing mortgage to a new property when you sell your current home and purchase a new one. This means that you won't have to pay any prepayment penalties or break your mortgage contract.

How does a transfer mortgage work?

When you sell your current home and purchase a new one, you can transfer your existing mortgage to the new property by working with your mortgage lender. The transfer process involves releasing the existing property from the mortgage and adding the new property to the mortgage. This means that you'll continue to make payments on your existing mortgage, but it will now be secured by your new property.

One thing to keep in mind is that not all mortgage lenders offer transfer mortgages, so it's important to check with your lender to see if this is an option. Additionally, if you're purchasing a more expensive property, you may need to qualify for a larger mortgage to cover the difference between the sale price of your current home and the purchase price of your new home.

It's also worth noting that a transfer mortgage is different from a porting mortgage. A porting mortgage allows you to transfer your existing mortgage to a new property, but it also allows you to increase the amount of your mortgage to cover the cost of the new property. This can be a more flexible option, but it's not offered by all lenders.

Advantages of a transfer mortgage

There are several advantages to choosing a transfer mortgage when you're moving to a new home. Firstly, you won't have to pay any prepayment penalties or break your mortgage contract, which can save you money. Secondly, you can avoid having to go through the

process of applying for a new mortgage, which can be time-consuming and stressful. Finally, a transfer mortgage can help you maintain your existing mortgage rate and terms, which can be beneficial if you've locked in a low rate or favourable terms.

Disadvantages of a transfer mortgage

While there are many advantages to choosing a transfer mortgage, there are also some potential disadvantages to keep in mind. Firstly, not all mortgage lenders offer transfer mortgages, so you may not be able to choose this option if your lender doesn't offer it. Secondly, if you're purchasing a more expensive property, you may need to qualify for a larger mortgage, which can be difficult if you don't have a high enough income or credit score. Finally, you'll need to ensure that the terms and conditions of your existing mortgage are compatible with your new property, which may require some negotiation with your lender.

In conclusion, a transfer mortgage can be a convenient option for homeowners who want to move without paying off their existing mortgage. However, it's important to consider the potential advantages and disadvantages before choosing this option. If you're interested in a transfer mortgage, it's a good idea to speak with your mortgage lender to see if this is an option for you.

Transfer Mortgage

 

Transfer Mortgage

If you're a homeowner in Canada who's looking to sell your current property and purchase a new one, you may have heard of a transfer mortgage. This type of mortgage can be a convenient option for homeowners who want to move without paying off their existing mortgage. In this article, we'll explain what a transfer mortgage is and how it works in Canada.

What is a transfer mortgage?

A transfer mortgage is a type of mortgage that allows you to transfer your existing mortgage to a new property when you sell your current home and purchase a new one. This means that you won't have to pay any prepayment penalties or break your mortgage contract.

How does a transfer mortgage work?

When you sell your current home and purchase a new one, you can transfer your existing mortgage to the new property by working with your mortgage lender. The transfer process involves releasing the existing property from the mortgage and adding the new property to the mortgage. This means that you'll continue to make payments on your existing mortgage, but it will now be secured by your new property.

One thing to keep in mind is that not all mortgage lenders offer transfer mortgages, so it's important to check with your lender to see if this is an option. Additionally, if you're purchasing a more expensive property, you may need to qualify for a larger mortgage to cover the difference between the sale price of your current home and the purchase price of your new home.

It's also worth noting that a transfer mortgage is different from a porting mortgage. A porting mortgage allows you to transfer your existing mortgage to a new property, but it also allows you to increase the amount of your mortgage to cover the cost of the new property. This can be a more flexible option, but it's not offered by all lenders.

Advantages of a transfer mortgage

There are several advantages to choosing a transfer mortgage when you're moving to a new home. Firstly, you won't have to pay any prepayment penalties or break your mortgage contract, which can save you money. Secondly, you can avoid having to go through the process of applying for a new mortgage, which can be time-consuming and stressful. Finally, a transfer mortgage can help you maintain your existing mortgage rate and terms, which can be beneficial if you've locked in a low rate or favorable terms.

Disadvantages of a transfer mortgage

While there are many advantages to choosing a transfer mortgage, there are also some potential disadvantages to keep in mind. Firstly, not all mortgage lenders offer transfer mortgages, so you may not be able to choose this option if your lender doesn't offer it. Secondly, if you're purchasing a more expensive property, you may need to qualify for a larger mortgage, which can be difficult if you don't have a high enough income or credit score. Finally, you'll need to ensure that the terms and conditions of your existing mortgage are compatible with your new property, which may require some negotiation with your lender.

In conclusion, a transfer mortgage can be a convenient option for homeowners who want to move without paying off their existing mortgage. However, it's important to consider the potential advantages and disadvantages before choosing this option. If you're interested in a transfer mortgage, it's a good idea to speak with your mortgage lender to see if this is an option for you.

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4 Things You Need To Know Before Refinancing Your Home

 

 One of the most common questions I hear as a Broker is "Should I choose a Fixed Rate Mortgage or a Variable Rate Mortgage?" - while there is no one standard answer there are several factors that can help determine which one is right for you. First, it is important to understand there are advantages and disadvantages to choosing either. Variable mortgages have historically resulted in homeowners paying lower rates but because they are tied directly to the Bank of Canada rate (which is announced and potentially changed 8 times a year), they are vulnerable to fluctuations which can drive rates down and save you money or drive rates ups and affect how much of your payments are going towards your principal amount owing. Fixed rates may be higher than variable rates but they are consistent for the term of the mortgage - they are not subject to fluctuations caused by changing interest rates. Fixed rates are normally recommended for first-time homebuyers so they can more easily manage their household budgets and mortgage payments without worry. Before deciding which option is better for you ask yourself a few important questions and always talk to a mortgage professional to evaluate your unique situation and mortgage needs before making a commitment.

Can I afford the risks that come with a Variable Rate Mortgage?

Because there is some risk associated with variable-rate mortgages you must be able to mitigate the risk if rates do rise and handle any budgetary changes required. One method of protecting yourself involves setting your payment to a fixed amount that's higher than the minimum requirement. To do this many mortgage companies recommend setting your payments up based on the current five year fixed rate will allow you to provide a buffer in the event that rates rise and as an added benefit because you're paying more than the minimum amount you will also be paying more of your principal. Another way to protect yourself from increasing rates is to choose a 35-year amortization but pay the 25-year amortization-sized payment. If the rates increase you can go down to the lower 35-year amortization payment until rates decrease again.

Do I have a large down payment (in excess of 20%) or significant home equity?

If you are not a first-time home buyer and have significant home equity or if you are able to make a large down payment you can hedge against some of the risks that may come with a Variable Rate Mortgage.

Does a variable rate mortgage fit my risk profile and comfort?

If you're the type of person that likes or needs stability and consistency then a variable rate mortgage may not be the best option for you. Before choosing a variable rate mortgage you must determine if it fits with your personality, lifestyle, income, need for security, and your family's ability to absorb risk without having any negative impacts. If you are going to worry about what is happening with your next payment every month or stress about possible increases to your amortization and lose sleep then a fixed-rate mortgage is probably the better option.

Are there different types or options for variable-rate mortgages?

If you are considering a variable rate mortgage then there are a few factors you need to explore with your mortgage broker or lender:

1. Payment frequency - Make sure you are aware of the options available before deciding. Some lenders may not allow certain variations of payment frequency (i.e. accelerated bi-weekly or weekly payments).

2. Rate changes - Some lenders change their variable rates in line with the Bank of Canada (eight times per year) while others adjust them quarterly.

3. Conversion to fixed-rate - Does the lender allow the mortgage to be converted to a fixed-rate mortgage at any time? If yes, what rate are you guaranteed on conversion - the best-discounted rate or the posted rate?

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COVID Have you in over your Head in Debt? Try This

 COVID did more than harm the health of millions of people – it damaged the household finances of millions too. As we move out of the pandemic and into our ‘new normal’ you have to pick up the financial pieces.

Whether you lost your job, lost hours, or couldn’t work, you may have incurred a large amount of debt. As you figure out what to do next, consider looking at your home as a resource to get you out of financial distress.

 Home Values Remain Steady

While we face a lot of uncertainty in the world, one factor remains steady – home values. As a homeowner, this is great news. You can use your home to help bail you out of your financial issues.

Most homeowners can tap into 80 percent of their home’s equity. If you’ve paid down your first mortgage, this means you may have ‘free money available to help get you out of debt. For example, if your home is worth $300,000 and your first mortgage balance is $150,000, you have $90,000 available in equity. You can use that equity to get out of debt.

 Interest Rates are Low

 If there’s one good thing that came out of the pandemic and the destruction it caused, it’s the low-interest rates. Refinancing your current mortgage just got a lot more affordable. You can take advantage of rates in a couple of ways:

· Rate/term refinance – Lower rates mean lower mortgage payments. If you can lower your rate enough, you could see significant savings monthly and over the life of the loan. If finances got tight, this could be a great way to free up some cash each month.

· Consolidate debt – If you have a lot of debt to pay off because of the pandemic, consider refinancing for a larger amount than you owe and using the money to pay off your debts. You’ll only have one payment and a much lower interest rate to pay as you work your way out. Options to Get your Home’s Equity As a homeowner, you have a few options to get your home’s equity:

 · Cash-out refinance – If you prefer to have just one mortgage, refinance your first mortgage as a cash-out refinance. You take out a larger amount than you owe on your first mortgage, using the difference between your new and old mortgage amount to pay off your debts. We don’t tell you how to use the money, but the best use would be to consolidate your debts.

· Home equity loan – If you want to leave your first mortgage alone, consider a home equity loan or second mortgage. This loan gives you the equity (up to 80%) in one lump sum. You can use the funds to pay off your debt, consolidating it into one loan.

 · Home equity line of credit – If you prefer a line of credit (like a credit card), consider the HELOC. This is also a second mortgage, but it works differently. You don’t receive the funds in one lump sum unless you want to. Otherwise, the money sits in a line of credit which you can draw on when you need it. You make interest-only payments for the first 10 years, which is the draw period. After 10 years, you pay principal and interest payments and cannot draw from it any longer.

How to Qualify

 Tapping into your home’s equity may be easier than you thought. Just like when you bought your home, you need average credit and a decent debt ratio. If you have these qualifications, you may have many options to tap into your home’s equity.

We have a variety of options available including second mortgages and a cash-out refinance option. We’ll work closely with you to help you determine which loan would suit your needs the most. 

As you explore your options, look at the big picture. Don’t focus only on the interest you’ll pay monthly, but on the overall money, you’ll save on interest when you pay off your high-interest debt. Mortgage rates are considerably lower than consumer debt rates, making it a great way to get out of debt, keep your budget intact, and make the most of this time as we work our way through the COVID-19 pandemic

 

Reverse Mortgage – A Powerful Tool During the Pandemic

 

A reverse mortgage helps senior homeowners age in place while supplementing their income. Unlike a traditional mortgage, a reverse mortgage doesn’t require repayment while the homeowner lives in the home but becomes due and payable when the homeowner leaves permanently or passes away.

 

With the coronavirus pandemic, aging in your home is a much more desirable outcome for many seniors. Living in a nursing home with high COVID rates is too risky with the high transmission rates and the isolation from family. Many seniors are turning to a reverse mortgage to help them stay in their homes.

 

What is a Reverse Mortgage?

A reverse mortgage draws out the equity in your home. You’ve built it up and now it’s your chance to use it while you’re alive. It accrues interest, but you don’t have to pay it – the full amount of principal and interest is due only when the homeowner no longer lives in the home. 

Your home continues to appreciate even while you have a reverse mortgage. Any equity left after paying off the mortgage is yours (or your heirs) to keep when you sell the home.

It’s a common myth that the bank owns your home when you take out a reverse mortgage. This isn’t the case. You still own the home and decide if/when to sell it

How Does it Work?

The reverse mortgage process is a lot like a standard mortgage. You must apply with a lender and get approved. You can borrow up to the allowed amount based on your age, home value, amount of equity, and current interest rates.

 

You can receive payments as a lump sum, as a line of credit, or as regular monthly payments. You choose the structure that works best for you. For example, if you need a regular monthly income to supplement retirement, you may choose monthly payments. If the reverse mortgage is more of an ‘emergency fund’ you may choose the line of credit, drawing funds only as necessary.

 

You are responsible for the home’s upkeep, property taxes, and insurance to keep the reverse mortgage.

 

Who Qualifies?

The reverse mortgage program is for seniors, but more specifically the youngest borrower must be at least 55 years old. The older you (or the youngest borrower) are when you take out the loan, the more money you’ll get because lenders base the loan amount on your life expectancy. The older you are, the more money you’ll receive because you’re less likely to outlive the equity.

Aside from age, you must meet the following:

·        Own the home without a mortgage or a very small mortgage

·         You must live in the home as your primary residence

·         You must speak to a lawyer to ensure you understand the reverse mortgage process and what it means for you  

What Does it Cost?

Seniors don’t have to pay anything out of the pocket of the reverse mortgage. All fees are taken from the loan proceeds.

Each lender has its own fees, but in general, you’ll pay:

·         2% upfront mortgage insurance fee

·         Standard loan closing costs to cover credit checks, appraisals, and title

·         Monthly mortgage insurance

·         Monthly service fees

 

The funds come off the top of the loan proceeds, so you see less cash in hand, but you don’t have to fork out the funds upfront to get the loan.

 

The Benefits of the Reverse Mortgage

 Today, the reverse mortgage helps seniors age in place and avoid a nursing home, which until COVID is under control, maybe a necessity for more seniors than ever before.

 

In addition, the reverse mortgage offers these benefits:

 

·        You remain in your home and continue homeownership

·         You don’t owe any monthly payments

·         Your beneficiaries won’t owe any more than the home’s value when you pass away, even if you owe more than the home’s worth

·         You have many options for loan disbursement to make the funds last as long as possible

·         It’s easy to qualify as long as you meet the age requirements, have home equity, and aren’t delinquent on any federal debts

 A Reverse Mortgage Helps Seniors Age in Place

Seniors today want comfort and their family. In today’s environment, most people can’t see their families, making it harder on everyone. With the pandemic still an issue, it’s hard to feel comfortable moving into a nursing home and being cut off from outside contact.

 A reverse mortgage gives seniors the money they’ve worked hard to have all these years, enabling them to age in place, in their own home where they are comfortable. A reverse mortgage helps alleviate financial stress while ensuring physical and mental peace. Many financial planners today recommend a reverse mortgage because it provides financial flexibility, with its tax-free proceeds, allowing you to make the most out of your retirement funds. 

Keisha Johnson helps individuals position themselves to take advantage of great opportunities such as homeownership as well as achieve their investment potential in the real estate market.  She is a community service award winner and offers her service to the community by educating the youth about their credit and positioning themselves to take advantage of great opportunities in the future.

 

With over 10 years of experience, she has extensive knowledge that she shares with her clients during the home purchase process.  Whether they are first-time homebuyers looking to take equity out of their home, or they're ready to purchase an investment property, Keisha educates her clients so they feel empowered with information during the home purchase journey

I have also been featured in Authority Magazine, I Love Mortgage Brokering Podcast, Thrive Global as well as Bitbean online Magazine.

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If the mortgage you need is at the bottom of the sea....I will find it!!

Keisha Johnson
Mortgage Broker Lic #M09001578

 

RTS Mortgage Financial

Licensed under Royal Dominion Mortgages Inc 

Brokerage office

1585 Markham RD Suite 409, Toronto, ON M1B 2W1
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 kj@rtsmortgagefinancial.com

Information About Reverse Mortgage Loans for Canadians

In Canada, reverse mortgages are loans that provide a safe and easy way to access the funds that are currently locked into your mortgage. There are several similarities and differences between regular Canadian mortgages and a reverse home equity loan. You can apply for one through a Canadian mortgage company, as you would with a regular mortgage. However, there are more restrictions for qualifying for one in Canada than with a regular mortgage. The payment flow is another difference between these two types of mortgages. In Canada, unlike a regular mortgage, the lender pays you, rather than you paying the lender.

In order to qualify for such a specialized mortgage, you must meet certain criteria. You have to be a Canadian homeowner. You can only qualify if you are over 55 years of age. A key financial qualification has to do with your current mortgage, which must be less than 40% of your home's total value. Of course, just like with a regular mortgage, qualifying isn't everything. Just because you qualify for a reverse mortgage won't mean that it is the right choice for you. Carefully weigh the pros and cons to see if it's a good financial decision for you and your family.

There are a number of benefits to these types of mortgages. Canada does not tax the cash you receive. This means that you can turn part of your home's value into tax-free cash. Another benefit is that you can choose the type of payment you will receive. Whether you prefer a monthly payment, credit or a lump sum, this tax-free money is yours to do with as you please. You don't need to make payments until you sell your home, as long as you and your spouse live there. The main benefit is the financial freedom that you are provided. This could be the freedom to retire early, travel, do home improvements, or make a large purchase. The decision is yours.

As with any financial decision there are restrictions that may or may not work for you. It's important to understand all the ins and outs. In Canada, reverse mortgage interest rates tend to be higher than a line of credit because you have the option of never making an interest payment until you sell your home. There are set up fees involved too. Although these fees will vary depending on the broker you deal with you will want to include them in your plan as they will factor into your decision.

There are a number of different people you should consult when considering a specialized mortgage. Talk to your financial advisor as well as a mortgage specialist. You should also consider discussing the decision with a legal specialist to ensure that you understand all the intricacies of the arrangement before you sign anything. This would be no different than the process you took when you contacted a real estate lawyer before you bought your house and signed your initial mortgage. You also want to discuss the decision with your family and make sure that everyone is clear and on the same page. Only when you have a clear understanding of the benefits and disadvantages of reverse mortgages will you be able to truly make a good decision about whether it is the right financial move for you.

ReverseYourMortgage (a division of Mortgage Edge) are Canadian Reverse Mortgage [http://www.reverseyourmortgage.ca/what-is-a-reverse-mortgage/] experts and have specific experience helping retirees make important financial decisions.

ReverseYourMortgage only recommends safe and secure products like the Canadian Reverse Mortgage [http://www.reverseyourmortgage.ca/what-is-a-reverse-mortgage/] and their client's interests are always their primary concern.

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