Ephraim Vecina
REP

Sharing the fruits of long industry experience in Toronto, Dominion Lending Centres accredited mortgage professional Michael Sneddon outlines various answers to some of the most common reverse mortgage questions he encounters. Real estate professionals can also use said answers to assuage clients’ concerns.

If I have an existing mortgage on the property, can I get a reverse mortgage?

Sneddon noted that this is the most frequent question surrounding reverse mortgages. In fact, “it is actually one of the most common uses for a reverse mortgage – to pay off the current mortgage and eliminate that payment and help with monthly cash flow.”

“However, it is important to realize that you would need to qualify for enough to pay that existing mortgage in full,” he explained. “If you have $70,000 remaining on the mortgage, you would need to qualify for at least $70,000 to be eligible for a reverse mortgage.”

“If you owe $70,000 and qualify for $100,000 in reverse mortgage funds, the $70,000 would be paid first and you would be left with the remaining $30,000,” he elaborated. “[The] existing mortgage must always be paid off using the reverse mortgage funds and you get to keep whatever is left. Essentially, you are swapping your mortgage with a reverse mortgage and keeping the excess cash.”

Can I pay the interest or make payments on the amount I receive?

Monthly interest payments are permitted, and it is also allowed to “pay up to 10% of the amount borrowed (1 payment per year) if you wish.”

“However, you also have the option to pay nothing at all until you sell the property or until you pass away. Most people choose this option but it is nice to know that you can pay the interest every month (essentially turn the reverse mortgage into the same thing as a Home Equity Line Of Credit).”

What if I want to sell my home?

A home can be sold at any time, even during a reverse mortgage. “The mortgage amount (plus any accrued interest and prepayment penalties, if any) would then be paid from the proceeds of the sale. The process would be exactly the same as if you had any other kind of mortgage or HELOC on the property.”

View Sneddon’s full list of frequently asked questions.

1- If I have an existing mortgage on the property, can I get a reverse mortgage?
Not only is this the most common question regarding reverse mortgages, it is actually one of the most common uses for a reverse mortgage – to pay off the current mortgage and eliminate that payment and help with monthly cash flow.
However, it is important to realize that you would need to qualify for enough to pay that existing mortgage in full.
For example: If you have $70,000 remaining on the mortgage, you would need to qualify for at least $70,000 to be eligible for a reverse mortgage.
If you owe $70,000 and qualify for $100,000 in reverse mortgage funds, the $70,000 would be paid first and you would be left with the remaining $30,000.
The good news is that the reverse mortgage funds can also be used to pay any penalties or charges for paying out your mortgage as well.
However, the existing mortgage must always be paid off using the reverse mortgage funds and you get to keep whatever is left. Essentially, you are swapping your mortgage with a reverse mortgage and keeping the excess cash.

2 – Can I pay the interest or make payments on the amount I receive?
Yes, you can make monthly interest payment if you choose and you can also pay up to 10% of the amount borrowed (1 payment per year) if you wish.
However, you also have the option to pay nothing at all until you sell the property or until you pass away. Most people choose this option but it is nice to know that you can pay the interest every month (essentially turn the reverse mortgage into the same thing as a Home Equity Line Of Credit).

3 – How do you determine how much I qualify for? I thought I could get 55% of my home value?
This is a common question that we get. It is important to note that you can qualify for up to 55% of the value of the property and not everyone will get this amount. The words ‘up to’ are very important in this statement.
To determine how much you qualify for, four different factors are used: The ages of all applicants, the property value, the property location (postal code) and the property type.
Here is a quick example for all 4 factors: Someone aged 80 will qualify for more than someone aged 60; someone in a city will qualify for more than someone in the countryside; someone with a property value of $500,000 will qualify for more than someone whose value is $200,000 and someone who lives in a detached house will usually qualify for more than someone who lives in a Condo.

4 – I’m 60 but my wife is 53, can we still qualify?
Unfortunately, no. Both applicants need to be 55 or over to qualify. Even if just one of you is on the title, because it is deemed a ‘matrimonial home’ (meaning that the husband and wife both have a legal right to the home, by nature of being married) both of you need to be 55 or over.

5 – What is involved in the application?
Reverse mortgages aren’t as difficult a process to go through as a traditional mortgage. However, you aren’t going to simply be given the money either – remember you are still talking about large amounts of money here and the lender is a Schedule A bank.
Your credit score and income are not usually significant factors in the application – but the lender will still check these. In addition to this, proof of identity and other such paperwork is required.
An appraisal is always required and is the first step – so the lender can identify the market value of your home and therefore how much they can lend. However, it is possible to get a ‘quote’ before this.

6 – What if I want to sell my home?
You can sell your house at any time if you have a reverse mortgage. The mortgage amount (plus any accrued interest and prepayment penalties, if any) would then be paid from the proceeds of the sale. The process would be exactly the same as if you had any other kind of mortgage or HELOC on the property.

7 – Will I still own my home? Yes, you will remain on the title for as long as you or your spouse live in the property and you can never be forced out of your home because of a reverse mortgage.
In fact, from this point of view a reverse mortgage is ‘safer’ than a traditional mortgage. Under a traditional mortgage, you could lose your home for not paying your monthly mortgage payments. Since no such payments exist for a reverse mortgage, there is no such risk.

8 – If I sell my house, can I re-apply for another reverse mortgage on my new property? Absolutely! As long as the property is your primary residence – but just remember that you would need to qualify for enough to pay any mortgage on the new property.
Reverse mortgages can be used for purchases in this way.

Copyright © 2017 Key Media Pty Ltd

Justin da Rosa
REP

“Short answer: No,” according to one expert.

“We saw an immediate stop to real estate in Vancouver and a 23% drop in average price, looking at the entire lower mainland market,” Elton Ash, regional executive vice president of RE/MAX of Western Canada, told REP. “That recovered fairly quickly. By May of this year, the average price was higher than just before the tax was implemented.”

Vancouver’s 15% foreign buyer sales tax was announced in late July of last year in a bid to address affordability issues in what was, at the time, Canada’s hottest real estate market.

And it appeared to do the trick … at first.

The average home price in Vancouver was $1,007,687 in July 2016; it fell to $833,065 a mere month later.

But then a recovery seemed to begin.

The average price increased slightly in September to $864,566.

$891,705 in October.

And now, most recently, the average price in Vancouver cost $1,053,655 – more than the average home cost just prior to the foreign buyer tax.

“This was the issue around the whole (foreign buyer tax): There is no accurate data as to exactly the number of transactions that non-Canadians are buying,” Ash said. “The government at the time was speculating it was somewhere between 12-15% of the total market. Anecdotally, from our membership, it was less than 5% of the market.”

Ash argues the tax was merely political pandering; a voter-friendly “solution” to a problem.

The real solution to affordability, according to Ash, is to address supply issues.

“This was all done in the name of affordability and the real issue is supply. You can’t tax your way out of a problem. Obviously, at least in my mind, you have to attack the supply side of the equation. It’s simple economics: Supply and demand,” he said, noting it can take up to 10 years for housing projects to gain approval from the government.

“There are 65,000 doors at some point of approval in the lower mainland. Until the municipalities get their act together and address it along with the provincial and federal governments” supply will continue to be an issue.

Copyright © 2017 Key Media Pty Ltd

Steve Randall
Canadian Real Estate Wealth

If the federal government forces mortgage lenders to carry more of the risk for delinquencies it could have a negative impact on the housing market and lead to an increase in mortgage defaults.

A document obtained by the Canadian Press reveals that the Department of Finance believes risk-sharing could mean that lenders pull back on mortgage lending to riskier borrowers.

Fewer loans could mean a downturn in housing market activity and a decrease in prices, which could actually increase the risk of mortgage defaults.

No decision is expected on the proposals until later this year or 2018, as data and responses to a consultation process by the government need to be reviewed first.

Copyright © 2017 Key Media Pty Ltd

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Millennium Development Group launches ?toile, a 398-home highrise development in Burnaby

Simon Briault
The Vancouver Sun

Etoile

Project location: 5345 Goring St, Burnaby

Project size: 398 homes of between one and three bedrooms and ranging in size from 569 to 1,818 square feet.

Developer: Millennium Development Group

Architect: Chris Dikeakos Architects

Interior designer: CHIL Interior Design

Hours: Open noon to 5 p.m. daily except Friday

Telephone: 604-828-1373

Website: etoileliving.com

The densification that has been happening in the Lower Mainland in recent years has started to produce some attractive and mature urban communities, often centred around mass transit hubs. Brentwood Town Centre in Burnaby is one example, and it’s here that Millennium Development Group has plans for two high-rise residential towers to be collectively known as Etoile.

“The homes we’re offering here are very special in that they are all corner units,” said Peter Marek, director at Millennium Development. “The design challenge we gave to the architect was to make every home a corner suite and they’ve done a fantastic job with it. We have eight units per floor and we’ve been able to make them all corner units because of the design of the building – the footprint is kind of a clover shape, with two homes facing each direction.”

This leaves the central part of each building for the elevators and lobbies, maximizing the views for residents from their units, each of which will include an expansive outdoor terrace. Chris Dikeakos Architects are the people behind the design of the development, and the two residential towers will be connected by an amenity on the fourth floor. This will include a 50-foot outdoor pool, a hot tub and a cabana. Each tower will also have separate steam rooms, social lounges, fitness centres and rooftop green spaces of more than 37,000 square feet combined.

“We expect buyers from the Brentwood area for sure – people who have lived there for a long time and kids who have grown up in the area,” said George Wong, principal at Magnum Projects, the company that is marketing Etoile. “But the map that people are looking at for buying property in the Lower Mainland has expanded a lot in recent years, so we’ll be seeing people from places like Vancouver, the Tri-Cities and Coquitlam as well.”

Despite its urban setting and easy access to mass transit, Wong is keen to point out that Etoile will also be within walking distance of Burnaby Lake Regional Park, a natural sanctuary of 770 acres that includes the Lower Mainland’s largest lake and more than 19 kilometres of walking trails.

Amenities in the park include picnic areas and a rowing course suitable for canoeing, kayaking and rowing training. The rowing pavilion at Burnaby Lake Sports Complex has change rooms and a public canoe launch. In place of the sawmills that used to be part of the Burnaby Lake scenery a century ago, there is now a wildlife viewing tower, from where you can get an up-close look at beavers, ducks and turtles as well as a wide range of local and migratory birds. Also close by is Burnaby Mountain Golf Course, an 18-hole course with a 60-stall driving range.

Great recreational facilities aside, Wong expects that the convenience of Etoile’s urban location and its proximity to rapid transit will be the project’s main appeal.

“Brentwood Town Centre now has a critical mass to it now that means it’s really becoming an urban centre and Etoile will be very much a part of it,” he noted. “It’s attracting buyers from outside of the area because they can see the convenience of being able to walk to shops, entertainment, restaurants, banks, grocery stores and medical and dental offices right there in the community.

“For young professionals, the length of the commute to work remains among the very top factors in their decisions about where they buy,” he added. “We’re drawing a lot of people from Vancouver because you’re paying maybe as much as 40 per cent more for a condominium there. A lot of people have opted to move a bit further out and take that bit of a commute on the Skytrain, where they can sit and do their work if they need to.”

Buyers at Etoile will have a choice of two colour schemes and wide plank laminate wood flooring in all living areas. All homes come with air conditioning, ceilings of at least nine feet, Blomberg front-loading washers and dryers, and roller shade window coverings.

Kitchens feature two-tone, soft-close cabinetry, quartz slab countertops with waterfall finishes in Calacatta Nuvo or Coastal Grey, and marble-inspired porcelain tile backsplashes. They also have rectilinear stainless-steel sinks and professional kitchen faucets with built-in sprays. The Bosch appliance packages include gas cooktops, integrated stainless-steel wall ovens and hood fans.

In the bathrooms, there are European-style vanities with soft-close hardware, polished quartz countertops and above-counter double vessel sinks. There are floating mirrors and mirrored backlit medicine cabinets in master bathrooms, environmentally friendly dual-flush toilets and marble-inspired porcelain floor tiles and tub/shower surrounds.

Homes at Etoile will have between one and three bedrooms and range in size from 569 to 1,818 square

© 2017 Postmedia Network Inc.

Steve Randall
Canadian Real Estate Wealth

Canadian homebuyers are highly likely to research their housing options online and are second only to the UK for doing so.
Figures from HSBC show that 90% of Canadians who bought a home recently used an online channel, compared to the global average of 83% (the UK was top-placed at 93%).

The lender has looked at the trends in digital real estate and forecasts an increase with funding for disruptive tech firms in the industry increasing from U$221 million in 2012 to more than $2 billion last year.

“From online mortgage specialists to paperless mortgage renewals, technology is rapidly changing how we engage with and serve our customers in Canada and across the globe,” said Larry Tomei, Executive Vice President and Head of Retail Banking and Wealth Management, HSBC Bank Canada.

Researching, financing and buying homes are all set for increased disruption, Tomei says, and there are some key trends already developing.

Drones and other tech-based viewings of homes will rise with virtual reality even allowing prospective buyers the ability to ‘live’ in the home for a few days before making their decision.

Dealing with real estate agents online will also becoming more prevalent. HSBC says that 29% of recent homebuyers began their conversation with an agent online (global average 31%).

Robo-advisors may see an increase but the lender’s report shows that dealing with a person is still important when arranging a mortgage. Although 74% of Canadian homebuyers use online channels for research, only 11% would be happy dealing with a robo-advisor for their mortgage compared to 41% talking to the bank and 35% to a mortgage broker.

“The research supports what we already know: while more and more Canadians are embracing disruptive technology in new and exciting ways, the need for the human touch hasn’t diminished,” Tomei  concluded.

Copyright © 2017 Key Media Pty Ltd

Steve Randall
Canadian Real Estate Wealth

growing house prices clashes with a slowing of adult population growth and a decrease in disposable household income.

The agency’s early warning system report shows that evidence of overvaluation at the national level remains moderate but strong evidence is seen in Toronto, Vancouver, Hamilton and Victoria.

“We’ve maintained Canada’s overall rating at strong evidence of problematic conditions as we continue to see moderate overvaluation and price acceleration,” said Bob Dugan, Chief Economist.

Vancouver is now showing moderate evidence of overheating due to townhomes and apartments seeing high demand leading to multiple-offer situations and higher prices, the report warns.

Toronto continues to show strong evidence of problematic conditions.

Economic fundamentals like income and population growth cannot fully explain the rapid growth in house prices in Toronto,” said Dana Senagama, Principal Market Analyst (Toronto).

CMHC also highlights that evidence of overbuilding has increased from six centers to seven with rental apartment building in Quebec outpacing demand.

There is also moderate to strong evidence of overbuilding in markets in the Prairies.

Copyright © 2017 Key Media Pty Ltd

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Read the Report Here.