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Finance

Income from home equity

When retirement funds run low, seniors often ask if tapping into the equity in their home is the right way to retain financial independence. To see if this option might be a good fit for you, consider if you agree with the following statements:
 
  • Staying in my home is critical to the quality of my retirement lifestyle.
  • The idea of renting instead of owning a home bothers me.
  • My income consistently falls short of ongoing expenses.
  • I expect my retirement savings to run out within the next few years.
  • I am comfortable with using the value of my house to fund retirement.
     
If you answered mostly ‘yes’, take a look at a few more details about a reverse mortgage called the CHIP Home Income Plan from HomEquity Bank:

If you have reached age 55, you may be eligible for CHIP.  It lets you convert up to 50 per cent of the equity in your home into tax-free cash.
 
Unlike other loans on the market, there are no credit or income qualifications and you are not required to service the interest, or repay the principal until you choose to move or sell.
 
It is also guaranteed that you will never have to repay more than the fair market value of the house at the time of the sale.
 
When polled by the Brondesbury Group this year, 78 per cent of existing CHIP customers said they would recommend a reverse mortgage to others as a cash-flow solution. Financial advisors and mortgage brokers have details and more information is also available online at www.chip.ca.
 
If you have any questions regarding the CHIP program or would like to take out a CHIP mortgage please call us at (250) 862-1806 or email at [email protected].


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Increase property value

Here are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment five to six times what they cost.

#5 Flooring

Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

#4 Fixtures

Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

#3 Bathroom

The bathroom is the second most important room in the home in terms of valuation. If you can add a three-piece bathroom to a home with only one full bathroom, you will see a dramatic rise in the market value of your home. While you should never compromise bedroom space for a bathroom, try sneaking one in dead space in the home. Scott managed to fit in a three piece bathroom under a staircase – the width of the room measured just 44 inches. As an added tip, use glass for the shower to make the bathroom feel more spacious.

#2 Kitchen

Kitchens are the single most important room in the home relating to valuation. The kitchen can make a significant difference in the value of your home. As such, it is crucial that you invest in having a modern, fresh and desirable kitchen. Modern cabinetry, under cabinet lighting and new appliances will all significantly increase the value of your home on the market. To save on cost without compromising construction and desirability, look at options like Ikea cabinets as opposed to custom cabinetry.

#1 An Income Suite

No surprise, but the single biggest way to increase the value of your home is to build an income suite within the property. Whether this is converting your basement into a rental, or another floor in the home, an income property will increase your home’s worth. The main reason for this is that it covers a portion, or sometimes all of your mortgage payments, and results in your home being cash flow positive – which creates real wealth that can supplement your income.

If you would like to talk to us about refinacing your home to take advantage of these value enhancing improvements please call (250) 862 1806 or email [email protected].



Renovation dreaming

Dreaming of a new fire pit? A deep soaker tub?

With summer on its way, lots of families have renovations on their minds. Did you know that home buyers can apply for a Purchase Plus Improvement Mortgage and get access to funds for renovations?

If you or a family member are looking to buy a home but are allocating all your savings for the down payment, here is a way to access more funds to do the renovations that will make that purchase into the perfect home.

Ask me about getting a Purchase Plus Improvement Mortgage.

This mortgage product allows you to borrow up to an extra $40,000 or more. At today’s low interest rates, this is a great way to finance your renovations.

This mortgage product could be perfect if you are interested in buying a fixer upper in your perfect, but pricier neighbourhood.

To find out if you or a friend or family member qualifies for a Purchase Plus Improvement mortgage product, contact me directly (250 862 1806 or [email protected]) and I’d be happy to assist you.





Mortgage costs

 
I always like to spend time with my clients going through the costs associated with the purchasing or a property in addition to the downpayment.
 
For this example I am going to use a purchase price of $400,000 with the minimum downpayment:

 
Downpayment:                              minimum 5%           $ 20,000
Balance of the purchase price:     maximum 95%        $380,000
Legal Fees and disbursements:                                   $1,200-$1,500
Title Insurance:                                                             $   249
 
Adjustments for property tax, fuel etc:                          $TBA
  • If the purchase is made before July 2 this will be a credit for the vendor's portion of the current year taxes which the purchaser will pay.
  • If the purchase is made after July 2 this will be a debit for the taxes paid up to the 31st of December.
Property purchase tax:  1% of the first $200,000 and 2%  ($6000) of the balance.

 
Home Insurance:                   $600-$800 per year
Appraisal Fee:                       $300-$500
Home Inspection Fee:           $450-$650
 
Interest Adjustment               $TBA
 
Depends on when the 1st payment is made, interest from closing date to the nearest interest period before the 1st payment.  (i.e. If payments are to be made on the 1st of the month, it would be the number of days from closing to the nearest 1st of the month and then the first payment would be the following 1st of the month.
 
Mortgage Broker Fee:           $TBA
 
In most cases this is not charged unless the broker is NOT being paid by the lender.
 
These are just estimates to assist the purchaser in calculating how much they require to purchase a home. It is suggested that the purchaser confirm these costs with his/her solicitor.
 
For any further questions please contact us at 250-862-1806 or email [email protected].


Read more Home Finance articles




About the author...

Laurie Baird is a Mortgage Broker with Verico Complete Mortgage Services. She has been in the mortgage business for 17 years starting as a lender with Royal Trust. She later worked at the Royal Bank as a Mortgage Consultant and 11 years ago became a Mortgage Broker. As a Mortgage Broker she is able to match her clients' needs with a lender who will provide them with competitive rates and products. Laurie has a Bachelor of Education degree from UBC.

Contact her at 250-862-1806 or by fax 712-0209 or visit:
http://www.okanaganmortgages.com/

Visit Laurie's blog at: http://www.okanaganmortgages.com/blog.html







The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.


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