Similar situation. Listening to Adam made me realize the flaw of my original thinking of not liquidating the registered account early. Now I know better.
I am a retired teacher and I have used the developed basement space in my home, which included a large , furnished bedroom, bathroom with a shower and a rec room with a tv and cable for college students for their college accomodation. It works well for all of us.
@victoriajonas44 You are right Victoria Congratulations on your achievements! It's great to see you doing so well. I understand that I am currently facing financial difficulties at the age of 55, and I am interested in receiving some helpful tips to improve my situation. Owning your own house is a significant goal for you, and it's a wonderful aspiration.
@victoriajonas44 " I anticipate your kind response. I'm interested in connecting with a financial consultant similar to the one who assisted you in achieving your financial goals.
@victoria jonas This is wonderful please Victoria i will also like to be part of this movement so tell me is ROCHELLE DUNGCA-SCHREIBER on youtube? please how do i reach her!
Watched several of your videos. Now it's interesting to discover some of the older ones before I found your channel. Another thought on this, that kind of ties into both downsizing and having a buffer, my high level plan at this point is that our home will be a downsizing buffer if one of us passes years earlier than the other. OAS is gone, most to all of CPP is gone and neither of us would want to live in and maintain our house alone. So downsize and supplement retirement income.
Hey Adam, I would like to thank you for all of your helpful information you continue to put out. You do a great service to Canadians and I have recommended you to many of my friends.
Great video. I'm interested in learning more about the tax implications of selling your home as a senior when you are downsizing and trying to set aside money to live off of in those Golden Years.
You do a super job of explaining things in all your videos. I am already retired but I am definitely recommending this channel to family and friends who are preparing to retire. Thanks!
I was happy to see your caution on the "reverse mortgage"*, as I don't think enough people understand the pitfalls. Other things to note are that the interest rates on this product are much higher than traditional mortgages. As I'm writing this, the 5-year CHIP mortgage has an APR of 7.82% compared to the Rate Hub rates that show as low as 4.55%. That's a huge difference, especially when the loan is compounding. *The term 'reverse mortgage' is utter nonsense. A mortgage is defined as any load secured by real property, which is exactly what this product is. There is nothing 'reverse' about this mortgage. The fact the name itself is a lie tells you a great deal about the product.
Why would this even matter if you're planning to die, living in the home that you put a reverse mortgage on? You only have to pay back the loan when you die or when you sell your home. Of course, any children who are expecting an inheritance on the home will see smaller inheritance, but if you don't care about that, does it matter if you pay 7% or 4% since you can't take your wealth with you when you die.
@@jillthompson6110 - The first, reason is that the higher the interest rate, the lower the amount you can receive. Let's say you're either a single female of 65 or your a 65-year old female with an older spouse. You'll get somewhere between 36 to 40% of your house value, does this sound good to you? The second has to do with your statement about staying in your home until you die. That's the myth about this toxic product. It's not when you die, it's when you cease living in your house. I suspect that this is exactly what happened to Paul's client. You can be deemed to have moved out if you're unable to live in your home for a certain amount of time. This can include being forced into a LTC home or even if you are forced to spend a long time in convalescence care. You can also lose your home if you don't maintain it, are unable to keep up with your property taxes, or fail to maintain insurance. So it just isn't a matter of deciding you don't care if you leave anything to your kids. You can lose your home, and that has happened. Just remember that financial institutions don't offer you something just because they're nice. They don't like to lose money, and will always structure their products in the way that benefits them the most.
That 4.55% mortgage is an insured rate which means there's a large insurance premium attached. An uninsured mortgage rate right now is 5.29% for a 5-year fixed. Reverse mortgages have safeguards in place in Canada like the "no-negative equity guarantee". It's definitely not for everyone but if someone is in a position in retirement where they're choosing between filling up their gas tank or buying an extra head of lettuce while they're sitting on a million dollars of equity, well at least they have an option. There is competition out there in this space that offers lower rates like Equitable Bank and Bloom. In the end, it comes to what makes sense for each individual.
@@dwaynekavanagh - You can get an uninsured mortgage aka traditional mortgage for the same rates, trust me, I've done it. It's also not a real comparison as the BoC has hiked rates between the time I made my comment and the time you made yours. How about keeping the comparisons consistent? Not sure why your talking about what I never claimed when it comes to negative equity, but I'm sure you have your reasons. While this is a safeguard, what about losing your home for not maintaining it? Who determines that? What about losing your home if you are forced into LTC, fail to pay your property tax, or let your insurance lapse? Are these safeguards? So do you sell this product? Do you make it explicitly clear what the dangers are, and show how this product will rip through the equity in their home?
Never will I buy a condo after seeing 2 friends condo fees going up every year. 1 friend is paying $700 /per month on top of a mortgage and you pay property taxes !
Hello we need some advice my mom wants to payoff a credit card and a personal loan, she wants to tap some money from her mortgage but she doesn't know what to do or how to get started.
Chip mortgages are horrible. My parents did it without us knowing. They paid massive interest. They should be illegal. They pray on elderly that don’t understand what’s happening b
I'm not sure this is a fair statement. Unlike a traditional mortgage, it's mandatory that the borrower get Independent Legal Advice. Basically, the lawyer will cover all the pros and cons and explain the financials and act in the best interest of their client, not the lender. Reverse mortgages are expensive compared to traditional mortgages that's true. This is because the lender is taking on the risk. I.e. they're lending someone money and not seeing any payments until the house is sold or both people on the title pass away (and the house is sold). If for some reason, the house goes down in value, the lender covers that loss, not the borrower. You have to remember it's a completely different product than a traditional mortgage. That said, it's always best to involve the children in the conversation. I'm sorry that happened to you.
@@dwaynekavanagh very unlikely the reverse mortgage company loses; it's more likely they make a lot of $$. My grandparents made the same mistake as @mjbalmmac15588 parents and the reverse mortgage company made out like bandits and the estate with $0. Personally, I'd recommend avoiding them at all costs, i.e. sell your home first if you are pressed for cash.
I feel that if parents want to afford a lifestyle and live in their home and can do it via a reverse mortgage. Unless the kids want to support their parents they should have no say
In my retirement, I’ll be upsizing - buying my first home. I’ve always dreamt of owning my own house, something that I have great personal pride in, and can enjoy during my best years. Something really nice that I can value for years to come, but the problem is having to live outside the metropolitan area into rural living. The thing that bothers me is I can make the worst mistake of my life, not having any family or close friends, or much in the way of community. Money won’t actually be a problem, it’s just ironic to have the money and buy a house going into retirement. Love these videos!
Compound interest is interest paid on interest, as you likely know. If you get a “reverse” mortgage of $100k the interest on that mortgage may be 10%. So at the end of the first year there will be 10% interest due of $1,000. That $1,000 will be added to the principal of the mortgage so going into the second year your balance outstanding will be $101,000 and the interest charged will be $1,010. The additional $10 being the interest you paid on the $1,000 loaned to you to pay the first year’s interest: thus interest paid on interest. In fact, the situation will be worse because rather than annual interest adjustments there will likely be monthly adjustments (I. e. monthly compounding) which makes the effective rate higher. The accumulating interest is one of the main reasons that make these plans very unattractive for most people.
If strata fees tripled then they must have been mismanaged...were not keeping up with maintenance or repairs. I like that HELOC idea to get the downpayment for a new place.
Yeah, as strata President we saw our insurance premiums alone go up over $30,000 in 2020, and then there was an increase in EVERYTHING, building materials, hourly wage, etc.... in 3 years our strata payment has gone up $150/month! This is in BC
Always enjoy your videos. I we have HELOC with scotiabank. I’m retired and my husband is soon to retire. I have a gripe with our bank. Because of the HELOC with scotiabank we aren’t able to defer our property taxes. Have you ran into a similar situation with others. Thanks
Love the comments about CHIP mortgages. Capitalising interest expense is NEVER a good idea. People essentially sell their homes for half their value and give away the rest of the equity in capitalised interest. Terrible plan.
We own our home and plan on living here for a while, but we were advised by a financial advisor to get a personal line of credit and not a HELOC. The line of credit has come in handy in retirement. Should we have taken out a HELOC. I'm not sure what is best.
The bank is more than happy to deal with you. No is lawyer needed. Especially if your home is mortgage free or close to it. I have a HELOC on my home. I originally got it for investment purposes on some future property, which I never ended up using. HELOC is just like having a credit card. The only difference is that the balance owed is backed up by your home, and the interest rates are a lot less than any credit card or a personal LOC would be.
If your home is your largest asset then you did things very wrong. If it becomes your largest asset as the years go by in retirement that’s even worse.
I am 53 and Love to watch this channel as I approach retirement in 10-15 years to gain knowledge.
Glad to hear it!
Similar situation. Listening to Adam made me realize the flaw of my original thinking of not liquidating the registered account early. Now I know better.
Renting out the basement has been our downsizing . Now the house expenses have disappeared. KEEP UP THE GOOD WORK!
I am a retired teacher and I have used the developed basement space in my home, which included a large , furnished bedroom, bathroom with a shower and a rec room with a tv and cable for college students for their college accomodation. It works well for all of us.
@victoriajonas44
You are right Victoria Congratulations on your achievements! It's great to see you doing so well. I understand that I am currently facing financial difficulties at the age of 55, and I am interested in receiving some helpful tips to improve my situation. Owning your own house is a significant goal for you, and it's a wonderful aspiration.
@victoriajonas44 " I anticipate your kind response. I'm interested in connecting with a financial consultant similar to the one who assisted you in achieving your financial goals.
@victoria jonas
This is wonderful please Victoria i will also like to be part of this movement so tell me is ROCHELLE DUNGCA-SCHREIBER on youtube? please how do i reach her!
@victoria jonas Thank you so much I was able to find her page and I already leave her a message.
Watched several of your videos. Now it's interesting to discover some of the older ones before I found your channel. Another thought on this, that kind of ties into both downsizing and having a buffer, my high level plan at this point is that our home will be a downsizing buffer if one of us passes years earlier than the other. OAS is gone, most to all of CPP is gone and neither of us would want to live in and maintain our house alone. So downsize and supplement retirement income.
Hey Adam, I would like to thank you for all of your helpful information you continue to put out. You do a great service to Canadians and I have recommended you to many of my friends.
I appreciate that!
Great video. I'm interested in learning more about the tax implications of selling your home as a senior when you are downsizing and trying to set aside money to live off of in those Golden Years.
You do a super job of explaining things in all your videos. I am already retired but I am definitely recommending this channel to family and friends who are preparing to retire. Thanks!
Thanks Peter!
Thank you for your excellent advice.
I was happy to see your caution on the "reverse mortgage"*, as I don't think enough people understand the pitfalls. Other things to note are that the interest rates on this product are much higher than traditional mortgages. As I'm writing this, the 5-year CHIP mortgage has an APR of 7.82% compared to the Rate Hub rates that show as low as 4.55%. That's a huge difference, especially when the loan is compounding.
*The term 'reverse mortgage' is utter nonsense. A mortgage is defined as any load secured by real property, which is exactly what this product is. There is nothing 'reverse' about this mortgage. The fact the name itself is a lie tells you a great deal about the product.
Why would this even matter if you're planning to die, living in the home that you put a reverse mortgage on? You only have to pay back the loan when you die or when you sell your home. Of course, any children who are expecting an inheritance on the home will see smaller inheritance, but if you don't care about that, does it matter if you pay 7% or 4% since you can't take your wealth with you when you die.
@@jillthompson6110 - The first, reason is that the higher the interest rate, the lower the amount you can receive. Let's say you're either a single female of 65 or your a 65-year old female with an older spouse. You'll get somewhere between 36 to 40% of your house value, does this sound good to you?
The second has to do with your statement about staying in your home until you die. That's the myth about this toxic product. It's not when you die, it's when you cease living in your house. I suspect that this is exactly what happened to Paul's client.
You can be deemed to have moved out if you're unable to live in your home for a certain amount of time. This can include being forced into a LTC home or even if you are forced to spend a long time in convalescence care. You can also lose your home if you don't maintain it, are unable to keep up with your property taxes, or fail to maintain insurance.
So it just isn't a matter of deciding you don't care if you leave anything to your kids. You can lose your home, and that has happened. Just remember that financial institutions don't offer you something just because they're nice. They don't like to lose money, and will always structure their products in the way that benefits them the most.
@@jillthompson6110 you are such a low minded. I just had to tell you that after reading your nonsense comment.
That 4.55% mortgage is an insured rate which means there's a large insurance premium attached. An uninsured mortgage rate right now is 5.29% for a 5-year fixed. Reverse mortgages have safeguards in place in Canada like the "no-negative equity guarantee". It's definitely not for everyone but if someone is in a position in retirement where they're choosing between filling up their gas tank or buying an extra head of lettuce while they're sitting on a million dollars of equity, well at least they have an option. There is competition out there in this space that offers lower rates like Equitable Bank and Bloom. In the end, it comes to what makes sense for each individual.
@@dwaynekavanagh - You can get an uninsured mortgage aka traditional mortgage for the same rates, trust me, I've done it. It's also not a real comparison as the BoC has hiked rates between the time I made my comment and the time you made yours. How about keeping the comparisons consistent?
Not sure why your talking about what I never claimed when it comes to negative equity, but I'm sure you have your reasons. While this is a safeguard, what about losing your home for not maintaining it? Who determines that? What about losing your home if you are forced into LTC, fail to pay your property tax, or let your insurance lapse? Are these safeguards?
So do you sell this product? Do you make it explicitly clear what the dangers are, and show how this product will rip through the equity in their home?
Never will I buy a condo after seeing 2 friends condo fees going up every year. 1 friend is paying $700 /per month on top of a mortgage and you pay property taxes !
Hello we need some advice my mom wants to payoff a credit card and a personal loan, she wants to tap some money from her mortgage but she doesn't know what to do or how to get started.
Chip mortgages are horrible. My parents did it without us knowing. They paid massive interest. They should be illegal. They pray on elderly that don’t understand what’s happening b
I'm not sure this is a fair statement. Unlike a traditional mortgage, it's mandatory that the borrower get Independent Legal Advice. Basically, the lawyer will cover all the pros and cons and explain the financials and act in the best interest of their client, not the lender. Reverse mortgages are expensive compared to traditional mortgages that's true. This is because the lender is taking on the risk. I.e. they're lending someone money and not seeing any payments until the house is sold or both people on the title pass away (and the house is sold). If for some reason, the house goes down in value, the lender covers that loss, not the borrower. You have to remember it's a completely different product than a traditional mortgage. That said, it's always best to involve the children in the conversation. I'm sorry that happened to you.
@@dwaynekavanagh very unlikely the reverse mortgage company loses; it's more likely they make a lot of $$. My grandparents made the same mistake as @mjbalmmac15588 parents and the reverse mortgage company made out like bandits and the estate with $0. Personally, I'd recommend avoiding them at all costs, i.e. sell your home first if you are pressed for cash.
I feel that if parents want to afford a lifestyle and live in their home and can do it via a reverse mortgage. Unless the kids want to support their parents they should have no say
In my retirement, I’ll be upsizing - buying my first home. I’ve always dreamt of owning my own house, something that I have great personal pride in, and can enjoy during my best years.
Something really nice that I can value for years to come, but the problem is having to live outside the metropolitan area into rural living. The thing that bothers me is I can make the worst mistake of my life, not having any family or close friends, or much in the way of community. Money won’t actually be a problem, it’s just ironic to have the money and buy a house going into retirement.
Love these videos!
Can you explain how CHIP is a compound interest? Heard it's higher than a mortgage but not compounding?
Compound interest is interest paid on interest, as you likely know. If you get a “reverse” mortgage of $100k the interest on that mortgage may be 10%. So at the end of the first year there will be 10% interest due of $1,000. That $1,000 will be added to the principal of the mortgage so going into the second year your balance outstanding will be $101,000 and the interest charged will be $1,010. The additional $10 being the interest you paid on the $1,000 loaned to you to pay the first year’s interest: thus interest paid on interest. In fact, the situation will be worse because rather than annual interest adjustments there will likely be monthly adjustments (I. e. monthly compounding) which makes the effective rate higher. The accumulating interest is one of the main reasons that make these plans very unattractive for most people.
If strata fees tripled then they must have been mismanaged...were not keeping up with maintenance or repairs. I like that HELOC idea to get the downpayment for a new place.
It's insurance actually. 3-5x, at least here in BC
@@ParallelWealth right...I heard that was an issue!
Yeah, as strata President we saw our insurance premiums alone go up over $30,000 in 2020, and then there was an increase in EVERYTHING, building materials, hourly wage, etc.... in 3 years our strata payment has gone up $150/month! This is in BC
Chip and reverse mortgage is a criminal s..t. never do that, they will rip you off so badly.
What about property tax deferral in BC? Good idea?
Yes it can be a great idea.
@@ParallelWealth Would love a video on pros and cons.
@@tvan3236 problem is its only applicable in BC
Always enjoy your videos. I we have HELOC with scotiabank. I’m retired and my husband is soon to retire. I have a gripe with our bank. Because of the HELOC with scotiabank we aren’t able to defer our property taxes. Have you ran into a similar situation with others. Thanks
I haven't. Seems strange to me tho. I would reach out to a mortgage broker and get more insight into this.
How do I register a HELOC? We currently have a new mortgage.
Speak to your mortgage broker
Love the comments about CHIP mortgages. Capitalising interest expense is NEVER a good idea. People essentially sell their homes for half their value and give away the rest of the equity in capitalised interest. Terrible plan.
IMO if you have a CL one should be disciplined not to use it as 2nd income its too easy to rack up the balance to fund lifestyle expenses
We own our home and plan on living here for a while, but we were advised by a financial advisor to get a personal line of credit and not a HELOC. The line of credit has come in handy in retirement. Should we have taken out a HELOC. I'm not sure what is best.
HELOC is typically cheaper. Plus I like to have a 'debt' tied to a property to avoid deed issues.
No where affordable if we sell; our mortgage is cheaper than current rents; thankfully we are a 2 income household eh :)
How do we apply for home equity? Do we need a lawyer? I own a house and its already paid off
Leave it that way. Don't take money out
The bank is more than happy to deal with you. No is lawyer needed. Especially if your home is mortgage free or close to it.
I have a HELOC on my home. I originally got it for investment purposes on some future property, which I never ended up using. HELOC is just like having a credit card. The only difference is that the balance owed is backed up by your home, and the interest rates are a lot less than any credit card or a personal LOC would be.
If your home is your largest asset then you did things very wrong. If it becomes your largest asset as the years go by in retirement that’s even worse.
A 30 yr old single family detached an hour outside Vanvouver is $2M. Very likely your largest asset at retirement.
@@ParallelWealth I always forget this channel is Canadian. Yes, a home is very likely a Canadian’s largest asset.
doesnt renting out part of your family home effecting your primary residence for tax purposes
I think only if you claim Capital cost on the building, check with your accountant first.