Mortgaging health costs

One of the most under-estimated expenses for retirees in Canada is healthcare.

A recent health index released by Sun Life indicated that over 44 per cent of Canadians didn’t expect to pay anything for medications in their later years and thought that their prescriptions would be covered by their provincial health care.

The 2013 Sun Life Canada Health Index found that 20 per cent of Canadians have neither health insurance nor money saved to cover future healthcare expenses.

When faced with high healthcare bills and no money specifically put aside to cover them, many have been forced to drain their retirement savings or run up their credit cards or sell their homes.

Many are unaware that without private coverage you can expect to pay around $5,000 a year out of pocket in health care expenses and have no idea about the costs of long-term care within their province.

Total health spending was forecast to reach $6,839 per Canadian in 2018, over $200 more per person than in 2017 ($6,630) and this amount is expected to increase over time.

The sad reality is that many seniors are being driven to food banks because they can’t afford health care costs.

Many are not aware that a reverse mortgage might be a good solution because it allows homeowners to access tax-free cash from the house they’ve paid into, without having to make regular mortgage payments.

A recent Ipsos poll found that 93 per cent of Canadians want to stay in their home during retirement. Many are on a fixed retirement income, which can make it difficult without extra financial help especially if you are burdened by high healthcare costs.

More Canadians are turning to a reverse mortgage.

A reverse mortgage can act as a solution to help with these additional and unexpected expenses. As the money is tax-free, it does not affect government benefits such as OAS or GIS.

A reverse mortgage can be a great way to access the equity in your home to pay for medical expenses or to retrofit your home for your aging needs.

Funds from a reverse mortgage can be used to:

  • Cover out-of-pocket prescription costs that are not covered by your provincial medical plan
  • Purchase mobility aides – walkers, scooters, canes, etc.
  • Retrofit your home for safety – ramps, grab-bars and other safety devices
  • Arrange in-home care such as nursing services, cleaning services or meal preparation

Here’s what we know:

  • Many have not planned for the increased health costs that area associated with aging.
  • 93 per cent of Canadians over 65 want to continue living in their current homes through retirement
  • 69 per cent want to maintain their independence by staying in their home
  • 94 per cent of our clients recommend a Reverse Mortgage

If you would like to learn more about how a reverse mortgage might assist you please give me a call at
1-888-561-2679 or visit www.reversemortgage-experts.ca for more information.


Spousal buyout mortgage

The end of a relationship does not necessarily mean that you will have to sell your home, which may be able to give both partners a new start.

There have been many changes at the mortgage insurers. One being that they will now only allow a refinance up to 80 per cent of the value of your home and this may be sufficient equity to pay off joint debts and provide a payout to the other spouse.

This may, however. make it difficult for those who are separating or divorcing as there may not be sufficient equity in the home to settle at 80 per cent, so you may think that the only option is to sell the home.

There are programs available that could help you stay in your home in the event of a separation, divorce or dissolution of a relationship by purchasing the home from your ex-spouse or partner for up to 95 per cent of the home’s value.

You will require a finalized separation or divorce agreement as that is required by a lender but you do not have to be married for the program. You can be friends or siblings, but this will require an exception for an approval by the mortgage insurer.

To qualify for this program, you must be able to afford the mortgage payment on your own along with your other liabilities. Not only must the lender approve your application, but also a mortgage insurer. Both parties must also be on title on the home prior to the separation.

There are some differences between two of the programs.

With the first mortgage insurer the funds can only be used for a spousal buy-out or the dissolution of a relationship. This could be friends, relatives, etc. There cannot be any matrimonial debts or pre-payment penalties or fees included in the new financing.

With the other mortgage insurer, the funds can only be used for a spousal buy-out and no other relationship breakdown but the new financing can include matrimonial debts if they are listed on the separation or divorce agreement. They will also allow pre-payment penalties and fees to be included.

To qualify for both of these programs, you must have good credit and earn sufficient income to support the mortgage payments.

It’s so important to seek the advice of a mortgage broker very early in the process as we can guide you along the way to a successful separation so you can both have the best possible outcome going forward.

If you already have a separation agreement, we can show you how the value in your home can make it work out for you both.

If you have any questions on this program please give me a call at 1-888-561-2679 or email [email protected] All inquiries are kept strictly confidential.

Programs to save you money

This is a busy time of year, but it is also a good time to review your finances by knowing what resources, grants and rebates are available for new and current home owners.

Here’s a list of 10 of these programs, but there are probably close to 30 currently available.

BC Property Transfer Tax (PPT) First-Time Home Buyers Program: 
Qualifying first-time home buyers may be exempt from paying the PTT of one per cent on the first $200,000 and two per cent on the remainder of the purchase price of a resale home priced up to $525,000.

Home Buyers’ Plan:
Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs to assist with the purchase of a home. The funds are not required to be used only for the down payment but for other purposes to assist in the purchase of a home such as paying off debts or to pay closing costs.

First-Time Home Buyers’ Tax Credit (HBTC): Eligible individuals who bought a qualifying home in 2018 can claim the home buyers’ amount of $5,000 when filing their 2018 income tax return. For 2018 the maximum tax credit is $750.

BC Seniors’ Home Renovation Tax Credit:
Assists eligible seniors 65 plus with the cost of some permanent home renovations to a principal residence to improve accessibility. The maximum refundable credit is $1,000 per tax year.

CMHC Green Home:
If you buy, build, or renovate for energy efficiency using CMHC-insured financing, you could receive a 15 per cent rebate for building a home to Energy Star standards or up to 25 per cent for building a home to R-2000 building standards.

BC Property Transfer Tax Newly Built Home Exemption:
Qualifying buyers of new homes may be exempt from paying the PTT on a newly built home or newly subdivided unit priced up to $750,000.

Home Adaptations for Independence (HAFI):
A program jointly sponsored by the provincial and federal governments provides up to $20,000 to help eligible low income seniors and disabled home owners and landlords finance modifications to their homes to make them accessible and safer. This program will provide up to $20,000 in financial assistance; either as a grant or a forgivable loan. Landlords are also eligible for this program.

BC Home Owner Grant:
Reduces property taxes for home owners with an assessed value up to $1,650,000. The basic grant is $570 and an additional grant of $200 to rural home owners. There is also an additional grant of $275 to seniors aged 65 plus and veterans of certain wars.

BC Property Tax Deferment Programs:
Qualifying home owners aged 55+ can defer some or all of your property taxes. Qualifying low-income home owners can defer property taxes and qualifying home owners who financially support children under the age of 18 can defer property taxes.

Heritage Grants Program:
Maintaining older homes can be costly, but preserving our heritage is important, so Kelowna provides grants to owners of buildings with a Heritage Designation a maximum of $12,500 per three-year period and buildings listed on the Kelowna Heritage Register a maximum of $7,500 per three-year period to help with the costs incurred in exterior conservation work.

If you would like further information on any of these programs or other programs that might be available in your area, please let me know.

Can't pay your mortgage?

Sometimes an unforeseen financial situation can happen and you might not be able to make your regular mortgage payment.

I can’t stress this enough — take immediate action at the first sign of distress and work together with a mortgage broker to find a solution to this difficulty.

The worst thing you can do is ignore it as open and early communication with your lender is the best action to take. Lenders get upset when you ignore them and are less likely to negotiate with you.

This one step will increase the chance of managing this difficult situation and early intervention is very important. We need to fully understand your financial situation in order to assist but there may be a solution.

Most Canadians don’t know what options are available. Did you know that some lenders will allow you to ‘skip-a-payment’ and this option might be available as part of your mortgage features.

If you ignore the situation too long you could find yourself facing foreclosure if you are in one of these situations:

  • You are about to miss a mortgage payment because you don’t have the funds to pay
  • You have missed one or two mortgage payments
  • You have received a notice or demand letter from your mortgage lender
  • Or you have been serviced a Petition for foreclosure

If any of this applies to you, this is a serious situation and you may be on your way to foreclosure.

The easiest thing to do is ignore any phone calls from your lender or the demand letter that they may have sent to you, but doing so is really the worst thing you can do and here are some of the consequences of ignoring the situation.

  • You won’t have any say in the court proceedings and they will go on without you
  • If the home is sold you will get little if any notice that you have to vacate the property
  • You may have less time to stay in your home than if you had appeared in court

You may have some options to solve this problem but speaking early to a mortgage broker is really your best course of action if you are unable redeem your mortgage by bringing your payments up-to-date along with any legal costs incurred by your lender.

Here are some ways that a mortgage broker can advise you:

  • Perhaps you can refinance to lower your monthly payments to keep you within your budget.
  • We can see if we can obtain a new mortgage with another lender and pay off your current lender
  • We can take a look and see if there is enough equity in your home to make selling it yourself worthwhile
  • Or if we can’t solve your problem, then going to court may be the best option

If you fall behind on your mortgage the interest and costs can accumulate very quickly and it is critical to seek assistance early before things get out of your control so please give me a call at 888-561-2679 for a confidential conversation or email me at [email protected].

More Mortgage Matters articles

About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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