Eligibility criteria for Canadian reverse mortgage

There are a few criteria that a person must meet to qualify for a reverse mortgage in Canada.

•    The person or both the spouses (if married) should be at least 55 years old
•    The person should live in Canada and own a home

Facts about Canadian reverse mortgages

Here are some important facts about reverse mortgages in Canada.

•    Loan amount – The amount of loan that a senior can take out depends on her age, home value and location of the home. The minimum amount of reverse mortgage is 20,000 USD and the maximum amount of reverse mortgage is 750,000 USD.

•    Associated expenses –Therefore, the borrower needs not to pay any closing cost from his/her pocket. It is directly deducted from the reverse mortgage funds.

•    Pre-approval of higher amount – In Canadian reverse mortgage, a borrower may get pre-approval for a higher amount even if the individual doesn’t require it right now. The individual can take out a small amount as advance and then the balance amount whenever required.

•    Tax deduction – Money taken out through Canadian reverse mortgage is absolutely free of tax. The borrowers are not required to pay any tax toward their reverse mortgage amount.

•    Effect on government benefits – Reverse mortgage in Canada doesn’t affect Guaranteed Supplement Government benefits or Old Age Security benefits that the borrower is already getting.

•    Devoid of monthly payments – As long as the borrower and/or his or her spouse stay in the home, he/she doesn’t need to pay any monthly payment toward the reverse mortgage.

•    Ownership – Reverse mortgage is different from selling a property. Canadian reverse mortgage ensures that the property will be held in the name of its owner (the borrower), like conventional online mortgage.

•    Protection of the estate – Reverse mortgage ensures that the borrower or the successors won’t be charged more than the actual appraised value of the property.

In Canada, a reverse mortgage loan is popularly known as a home income plan. Canadian Seniors, who want to preserve their investments for potential growth and income, can consider reverse mortgage as an effective option.

People looking into rent-to-own programs approach the situation in a number of different ways. They may have limited cash on hand. Perhaps they have bad credit or no credit at all. Most banks and lenders don’t grant mortgages to those with poor credit history. Rent-to-own programs are an attractive option because they help to build and repair credit.

1. Identifying Demographics

Many young people today are faced with the burden of loans or lines of credit. These can take years to pay off. The rising cost of living may also play a role. Whatever the cause may be, lack of money is a common problem and some people just can’t seem to save as much as they’d like.  There is also a list of other factors that may be at play, such as a short employment history or recent entrance to Canada.

Without any substantial savings or credit history, a person may experience barriers to home ownership. Rent-to-own programs do not require as large of an up-front payment as a down payment would. The monthly payments are comparable to that of home ownership, allowing the tenant to get used to paying these amounts within their budget.  The great benefit is that the tenant is able to live in the property that will soon become the home they own.

2. Reaching the market

As an investor, this is where you come in. Whatever adversity tenants have had to deal with, you can help them to overcome with a custom rent-to-own agreement.

So, how should you go about finding them? You can market to them through traditional classified ads, such as newspapers or niche listing publications. You could try advertising with online classifieds, buying signage in the area or using social media to reach your target demographic.

Unfortunately, all of these options take a lot of time, effort and resources to maintain. Identifying the right tenants is not a simple task.

3. Getting It Right

At Totem Strategic Investments, we know that a lot goes into finding the right tenants for your investment. Fortunately, we’re here to lend a helping hand.

As investors ourselves, we know that identifying quality tenants is of utmost importance. TotemSI and its partners have demonstrated necessary due diligence in identifying quality tenants for your investment. We’ve already done a lot of the work for you. We’ve spent time building relationships with pre-screened tenants that you can trust to take care of your property and make payments on time.

Our tenant relationships are evidence of our commitment to your success. We want to ensure that your experience is as smooth and efficient as possible. That means eliminating the messy DIY search and the potential pitfalls that go with it.

Of course, TotemSI respects the importance of personal research and making your own decisions. We can be as involved or uninvolved as you’d like. But we’re always here when you need us. Contact us today for more information about identifying rent-to-own tenants!

This is the exact reason Totem Strategic Investments has worked hard to bring together a large network of preferred partners for tenants like you. At TotemSI, you will find a team of knowledgeable and trustworthy professionals who are fully dedicated to your success.Our partners share our unique values and work ethic. Their strong reputations and experience demonstrate their professionalism, reliability, and utmost interest in customer care. They will work closely with you throughout the process, sharing their insight and expertise, to help achieve your big goals.

With TotemSI, you get it all. Each and every one of our partners can provide the vital services needed to create the best experience for our tenants. In partnering with us, you have a variety of quality experts in financing, legal counsel, insurance and real estate at your direct disposal.

1. Financing

Our mortgage brokers are very familiar with the system and it is likely that they have seen a similar scenario to yours. They have years of experience and the know-how to handle related situations. Our mortgage brokers can help you evaluate your situation and determine the financing options that work best for you.

2. Legal Counsel

Of course, any housing deal or rent-to-own program should involve solid legal agreements. Our lawyers have clearly defined and easy-to-understand processes. They will ensure your comfort and ease through all aspects of the transaction.

3. Insurance

Our insurance advisor will help you protect what is most important to you. With his advice and insight, you’ll be able to determine appropriate coverage and take the necessary precautions to ensure the financial safety of you and your family.

4. The Property

You also want a real estate agent you can trust, who understands your particular wishes and needs. Our partners include veteran realtors who specialize in finding perfect homes in perfect locations. Whatever happens to be on your must-have list, our extensive network of realtors can help.

The TotemSI network of preferred partners guarantees that you will have the best people by your side every step of the way. We promise you will feel comfortable under the guidance of our experts. With the help of our trusted partners, we will build a solid, customized solution that works for you.

Don’t just take our word for it. Let us show you! We look forward to understanding how we can help you achieve your goals.

That is why TotemSI has taken the time to build strong, lasting relationships with a number of leading industry professionals. Each and every one of our partners is hand-selected. They share our values, work ethic and dedication to your success as an investor.

Our partners are accompanied by prestige, having been praised and referred by a number of associates we know and trust. Rest assured that our network of trusted partners is the ultimate resource when it comes to real estate investing. These are people you can count on!

With their proven track records, we are confident that they can provide the vital services needed to create the best experience for our investors.

At TotemSI, you get the best of every world. Our network of professionals includes experts in financing, legal counsel, insurance and real estate.

1. Financing

Return on investment and cost of capital are critical metrics with which all informed investors should be familiar. Our mortgage brokers are dedicated to helping our investors select the financing options that best meet their particular needs.

2. Legal Counsel

Of course, the foundation of any major investment is a sound legal agreement. We are positive that our approachable, experienced and knowledgeable lawyers will exceed all of your expectations every step of the process.

3. Insurance

We know that preparing for the worst is never an enjoyable task. As you’re well aware, however, it’s extremely important and necessary. Our insurance advisor’s advice allows our investors to make informed decisions and achieve their goals through sound insurance and financial products.

4. The Property

All prospective buyers also need a knowledgeable realtor they can trust. TotemSI has an extensive network of quality realtors, through various high growth markets.  These agents have been selected by taking into account their knowledge of the target area, customer service a history of success.

Anyone can make their real estate deals more manageable by partnering with a knowledgeable team equipped with proven, turnkey systems and processes. TotemSI provides just that. In partnering with us, you have unlimited access to this vast network of preferred experts.

Our experience and expertise, in addition to these strategic partnerships, allow us to provide unparalleled investment consultation. We promise to work closely with you every step of the way to help you meet and exceed every last one of your investment goals.

If you’d like to learn more about how our network of preferred partners can help you achieve your investment goals, please contact us.

Make a List

Begin by writing up a detailed list of everything in your house that you’d like to modify, repair or improve on. For each project, outline exactly how you’d like to change it and what kind of resources would be required. You should also determine whether the jobs can be done yourself or if you would have to hire labour.

It’s really important to have a strong idea of what you want to do before you calculate any of the costs involved. Even the smallest changes can add up to large expenses.

Costing the Renovations

Estimating costs for a renovation is an inexact science. There are many variables with respect to the cost of materials and labour, which is why most renovations end up costing more than initially estimated.

When costing your renos, you should watch out for hidden costs, such as building applications, permits and inspections. These fees can add up fairly quickly and are often forgotten about. So be sure to allocate a little extra just in case.

Next, you’ll want to evaluate the degree of impact versus the price of each renovation. You can do this by performing a simple cost-benefit analysis. Basically, is it worth it for you to put the extra time and money into this renovation? To what degree will the renovation have on improving the value of your home?

To Renovate or Not to Renovate

It’s very easy to spend more on a renovation than the increased value it will deliver to your property. You don’t want to pay more in building costs now than you will gain in market price later. You might find that you’d be better to make 2-3 small enhancements to improve lifestyle or efficiency over large projects, such as finishing the basement or building the new addition.

The kitchen and bathroom are often the two renovations that add the most value to a property. According to the 2008 Cost vs. Value Report, a survey by Remodeling Magazine, kitchens are consistently one of the best investments to make, just ahead of bathroom renovations. It’s reported that, on resale, you can receive 70-130% return on kitchen and bathroom renovations.

If you have the money and the patience to undergo a kitchen or bathroom remodel, it can be well worth it. There are other valuable, and cheaper, renovation projects out there though. For example, painting and putting in energy-efficient retrofits.

Set Your Priorities

Now that you’ve determined which worthwhile projects you can afford, it’s time to decide what to do first. The answer will depend on your particular goals and plans. If you want to sell your property soon, your priorities are probably different than if you’re planning to stay for a few more years. In both cases, however, major structural repairs (think the roof and plumbing) should be high priority.

Ultimately, you want to spend money on the renovations that will increase the value of your home. Be mindful that you must appeal to a wide variety of tastes. A safe, neutral style might be better than one that is bolder and more cutting-edge. Keep in mind that specific renovations may make the property more difficult to change or sell later on.

If you’re still unsure, our preferred partner network consists of many knowledgeable real estate agents who are able to provide an approximate valuation of your home. From there, they can offer insight of the best renovation ideas they have seen in property sales. For more information, contact us today.

10. Regina, Saskatchewan

As of October 2010, properties in Regina sold for an average price of $257,032. This number was up 4.4% from October 2009.

9. Saskatoon, Saskatchewan

Properties sold in Saskatoon for an average price of $293,929 in 2010, up 7% from the preceding year.

8. Hamilton, Ontario

Identical to Saskatoon, Hamilton homes also boasts an average selling price of $293,929, up 7% from 2009.

7. Kitchener-Waterloo Region, Ontario

In October 2010, the average home in the K-W region sold for $308,004. This figure rose a massive 17.9% since the previous year. K-W is one of the fastest growing regions in the country.

6. Edmonton, Alberta

The average property in Alberta’s capital went for $317,096 in 2010. This number is down from 2009, but only by 0.6%.

5. Ottawa, Ontario

Property in the nation’s capital sold for an average price of $341,517 in 2010, a change of +6.5% from October 2009.

4. Calgary, Alberta

In 2010, the average Calgary home sold for $393,574, down slightly, -1.5%, from 2009.

3. Toronto, Ontario

In 2010, the average house in Toronto sold for $443,633, up 4.8% from the previous year.

2. Victoria, British Columbia     

In 2010, properties in Victoria sold for an average price of $506,777. This number is up 5.2% from 2009.

1. Vancouver, British Columbia

The huge jump here separates Vancouver from the rest. In Vancouver, the average property sold for $707,207, a 10.7% increase from 2009.

Most Expensive Cities to live in Canada

Housing prices are one thing, but what about everything else? As you know, no matter where you live, housing isn’t your only expense. You’ll need to look at the overall cost of living in order to determine exactly how expensive it is to live in any particular city.

This is demonstrated by the annual Mercer Global Cost of Living Survey, most recently released in July 2011. The survey lists the 214 most expensive cities to live in with regard to a variety of elements in addition to housing, such as transport, food, clothing, and entertainment.

While Vancouver is the most expensive Canadian city to buy property, Toronto has it beat when it comes to overall cost of living. Toronto moved up to the 59^th spot worldwide from its position in 76^th last year. It is reported that Canada’s largest city surpassed Vancouver mainly due to its high rental accommodation costs.

Vancouver’s position still rose, however. The city climbed to 65^th place from 75^th last year. It is followed by Montreal (79^th) and Calgary (96^th). Ottawa, in the 114^th position, is the least expensive Canadian city in the study.

Nearly one-fifth of Canada’s entire population lives in these 5 cities. You may ask why people choose to live in these locations if it’s so expensive. Of course there are also many qualitative reasons why people choose to live in expensive cities, too. Perhaps employment or a shorter commute plays a role. Proximity to family and friends as well as the culture and city services may also be important factors.

So be sure to assess all aspects before making a final decision on location. People make tradeoffs for a variety of reasons. Ultimately, you’ll need to decide what’s important to you and look to live in a region that compliments your lifestyle.  To learn more of a specific market in Canada, TotemSI has preferred partners within several of these markets.  To find out more, click here.

Job Security

Ask yourself how secure your job is. Is your company considering layoffs? Could you be terminated and, if so, how likely is it that you’ll be able to get another job right away? Remember that unemployment compensation isn’t typically enough to cover mortgage payments.

Another thing to consider is relocation. Is there a chance you could be transferred to another city or region within the next couple years? When you buy a home, you should plan to reside there for a while so that the property’s appreciation can more than cover the cost of selling. You obviously don’t want to lose any money on the sale. (This of course is negated should your property be in a high demand rental location, and you choose to carry two properties)

Maintenance

It is no secret that all homes require upkeep and maintenance. However, not everybody has the knowledge, resources or desire to tackle DIY repair projects. If so, would you be able to hire a professional? Can you afford the supplies and replacements should something break?

Rates & Savings

Are you in a position to take advantage of low mortgage rates? Are you able to move into a new area early in its development In best hopes to realize appreciation? These are opportunities to explore when you are deciding whether to rent or buy.

Relationships

What are your current living arrangements? Are you single or have you settled down with a family? The number of people you have to support will play a large factor in what kind of property you need and how much you can afford.

So, should you rent or own?

As a renter, you aren’t responsible for the maintenance of the house. If things are not in working order, it is the landlord’s responsibility to take care of the problem.
Rent offers more flexibility. Not only does it require less cash flow, but there is also an easy exit. You can move whenever you want.

On the other hand, as a renter, your monthly payments do not go towards anything – you’re not building equity. Also, in the meantime, you may miss out on a great opportunity in the housing market.

Are you planning to move again in the next couple years? Are you just starting out in your career? Are you unsure of your living arrangements or relationships? If so, renting is most likely the superior option.

As an owner, your home is an investment. Remember, mortgage payments go toward building equity. The property is yours, so you have the freedom to modify and renovate as you please.

Conversely, it is more difficult to move quickly when you’re an owner. You’ll have to leave time and resources free to sell and close. Owning a home also requires more cash flow because mortgage payments are more expensive and maintenance repairs are your responsibility.

In short, if you’re looking to settle down with a family and you have a stable job, you are likely better to start looking into owning a home.

So, as is the case with many questions of personal finance questions, there is no obvious answer to whether you should rent or own. Either you prefer to enjoy the flexibility & freedom that comes with renting or you choose to buy, building equity & taking pride in home ownership.

The key is thinking ahead. When deciding whether to rent or buy, it is recommended that you be conscious of what your life will look like 2 to 3 years from now. Keep your life goals and career aspirations in mind, and be aware of what could change.

If you have any more questions about renting or owning, TotemSI is always happy to assist you by having you speak to our team of Preferred Partners. We can also help if you’re still torn between the two and would like to hear the benefits of a rent-to-own property, click here to learn more.

What is Diversification?
Diversifying your investments is the key to a successful portfolio. It’s actually quite a simple concept. Simply put: you don’t want to keep all your eggs in one basket.  Diversifying your investment portfolio means spreading your money across different types of investments. You can do this by combining a variety of investment types, including: stocks, bonds, mutual funds, GICs, commodities, and real estate.

Why is Diversification Important?
Diversification provides a means to combat market volatility. By investing in various financial products and industries, diversification cuts down on some of the risk in your portfolio. It also reduces the overall impact of the ups and downs of the unstable market.

You don’t want all your assets moving in the same direction and at the same time. If that were so, you would experience high gains when your investments were performing well, but you would do very poorly when your investments were performing below expectations. By investing in different areas, which would react differently to the same event, you are able to better manage your risk and maximize your return.

Diversification means you have a smoother ride, which is less responsive to market fluctuations. You can sleep better at night knowing your financial status does not rely on one industry or market segment. There is less emotion, stress and worry involved.

Diversifying with Real Estate
If you’re interested in adding more stability and balance to your portfolio, look beyond traditional stocks and bonds. Investing in real estate is an excellent strategy to consider for a number of reasons.

Investing in real estate is a powerful way to add a valuable layer of diversification to your investment portfolio. This is because real estate has a relatively low correlation with the stock market. It is a viable investment option because it helps to offset volatility in any other asset class, like the equity market. If your stocks are failing, a concrete investment like real estate helps control the loss.

The great advantage in this strategy is control. Property ownership allows for a direct influence over return.

Diversification is a basic principle of successful investing and one that can help you on your way to achieving your long-term goals. To learn more about creating an optimal investment portfolio with real estate, click here to speak with the TotemSI team today.

1. Setting the Search Parameters
Starting out can be very overwhelming. There is a lot to consider when establishing what makes a good real estate investment. By first determining what you can afford, the purpose of the investment, the type of real estate you wish to invest in, and where you want to invest, your search for the perfect property will proceed much more smoothly.

It is important to select a price range within your budget and that allows for healthy resale opportunities in the future. In order to make sure a property is a viable investment for your portfolio, you should consider the following:

• Interest repayments
• Purchasing costs
• Ongoing costs (maintenance and repairs)
• Can you still afford it if the investment performs below expectations?

It is also important to determine what you want to get out of the property; is it maximum cash flow or long term appreciation?  Understanding this will help determine the kind of property you want to invest in. Different properties have different investment characteristics and results.  Also, have you thought about where you want to invest? As an investor, you need to establish criteria for the locations in which you feel comfortable investing. There are two strategies that apply here.  The first involves diversifying your portfolio across different regions in order to reduce your risk.  The second, for those looking to be more active, involves aiming to target one specific area and dominating that market . . . looking to build a presence, a Brand and are prepared to move fast.

2. Research
Solid research is one of the best ways to maximize the probability of success.  Above all else, a good investment property needs to be tenant-friendly. Research the surrounding area of the properties you’re interested in, and consider the following:

• Proximity to amenities such as public transport, schools, parks, shops, hospitals and government agencies.
• Proximity to cities and major employers. Is it a region with a diverse industry and employer base?
• Relevance to the targeted potential tenants. If you are considering property near a university or college, units might be an appropriate investment. Likewise, if you are looking in a community of retirees, large residences with stairs and extensive upkeep should be avoided.
• Potential risks and liabilities. Try to avoid features such as swimming pools. These can create additional risks and can be the cause of unnecessary expenses.

Also, try to set demographic benchmarks and keep an eye on demographic trends. This will ensure you are buying in an area that will continue to provide an income well into the future. Some things to think about include:

• Population growth levels. Low or negative growth is a poor sign and has the potential to lead to  growing vacancy and falling real estate prices.
• Average population age and wealth.
• The number and diversity of local employers. If a thriving town depends on only one or two large employers, the risk to the real estate market of something negative happening to one of these employers is significant.
• Industry and development forecasts and approved development plans. These may be good indicators of the future success of the area!
• Median property values.
• Commercial property rates. High commercial vacancies may suggest a slow or slowing economy.

3. Beginning the Search
Once you have determined your search parameters, the search for the actual investment property can begin. You can search for property through a variety of channels, including:

• Online advertisements
• Newspaper and magazine advertisements
• Real estate agents
• Expos and trade shows
• Directly through a developer
• Totem Strategic Investments

Once you find a property that satisfies all your investment criteria, it is time to make an offer! TotemSI and our Preferred Partners specialize in assisting you through these steps and helping you find the perfect investment property fast. To get started, click here.

Direction of change in average incomes:  rising average incomes can be a good thing for real estate values in a city.  Even if the current average is low, strong projected growth can be a positive indicator. Don’t just look at the growth rate, but also look at the growth rate to other areas of interest. Remember you are not operating in a vacuum; compare what you find in one area of interest to another.

Increase in demand by way of more people:  it doesn’t matter if the influx of people comes from formal immigration whereby people move to the region from another country, or if the people are relocating to the region from another part of Canada. The point is that an increase in demand without a corresponding increase in supply is a good thing for a local real estate investment.  Residential communities that become popular due to one or a variety of criteria can often result in accelerated valuation.

Business growth within a municipality can be a strong indicator and driver of this increase in demand.  An influx of businesses, whether emerging or established, means the creation of employment opportunities. Two examples west of Toronto can be used to describe this.  Mississauga’s growth ignited as corporate head offices relocated and business parks flourished, making proximity and commute a basis of logic.  Waterloo is an area that attributes its growth to the rapidly changing tech-world.  Young minds out of University and like-minded individuals are choosing to reside there to be in the hub amongst a specific skill set.  This instance may prove even more promising as there is in an influx of a younger demographic, looking to begin home ownership.  Yet with this, comes higher risk of start-ups and young businesses failing.  Regardless, employment opportunities attract people, and these people will need a place to live.

Transportation:  being somewhere that is easily accessible is a benefit. This doesn’t mean you want the world’s busiest highway running through your backyard. However, quick and easy access to major highways is convenient, and convenience is in demand. Additionally, transportation expansion can be a positive for the local real estate market. You can find out about future transportation plans by paying attention to various sources of news and information in regions of interest.  York region is a great example of this, as people came to expect development of the 407 toll-highway and expansion of a public transit system.

One of the best ways to conduct research is on-line. It’s amazing what you can find with some thoughtful looking. One source, which you may not be aware of, is the RBC Housing Affordability Index Report. This report shows the percentage of pre-tax income required to pay for a median home in a region.  It also shows mortgage carrying costs by city, year-over-year percentage change in home prices, and the ratio of home sales to new listings.

While very little in this life is guaranteed, some quality research can go a long way towards you making a more informed investment decision.  TotemSI prides itself on a team of Preferred Partners to help offer insight in their respective fields.  If you would like to get started in working with them, please click here.