As per a recent survey many Canadians are heading toward their retirement without much savings in their bank account. The survey was conducted on 1,500 Canadians over the age of 50. Only two in ten households disclosed that they would have more than $250,000 in their bank at the time of their retirement. And over half of all households said that they would not be able to save anything and the money they would run out in the first ten years of retirement. For seniors it has been felt that reverse mortgage and Vancouver mortgage broker would be of great help.
Here is how it works: If you are a homeowner older than 55, you can avail up to 50 per cent of your home’s value with a reverse mortgage without making any mortgage payments. Also, you don’t have to pay any interest or principal amount until you either sell the home or die. Your mortgage will be paid off from the sell of the home. Looking at its benefits many seniors are now contacting Vancouver mortgage brokers for this.
CHIP or Canadian Home Income Plan is the organisation that looks after reverse mortgage. As per their data there is about $1.5 billion in mortgages outstanding and 2,500 new clients will join the pool this year. This translates to about $250 million. Current clients are mostly couples in their early 70s. Older seniors generally receive a higher percentage of their home’s value than the younger seniors. The seniors are quite comfortable with reverse mortgage because it allows them to stay in their home with which they have emotional attachment.
Once you contact a Vancouver mortgage broker they will explain you the lending rates that vary depending on the term. For a six-month term the rate is now 3.99 per cent. On the other hand a five-year reverse mortgage rate is 5.45 per cent. When one term ends the mortgage is readjusted to the current mortgage rate. You can pay the interest annually and there is some benefit attached to it. You get a 50 basis points off when you choose that option. It is ideal for people who need cash to run their household and have nothing other than the house.
Though it has been felt by many that reverse mortgage is slightly more expensive compared to other investment products the scene is quite hopeful now. As the Vancouver mortgage broker will show you how the rates have gone down in last few years and they are more flexible now, because, you can now choose fixed or variable rates and also the length of the term. With good planning it is a great tool for the seniors.
The key lies in good financial planning with the help of a Vancouver mortgage broker on how to use reverse mortgage prudently. With good planning this works out to be better than home equity because of its ease to access the fund. So, if you need cash and also the comfort of your own house consider it as the most efficient way to secure your financial future.
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Vancouver mortgage broker can be of great help when you are looking for a reverse mortgage.
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