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What You Need to Know About CHIP Reverse Mortgage in Canada

Whether you’re faced with debts and expenses that you want to pay off, or you’re just looking to have some extra money to improve your day-to-day life, consider all your options. A Canadian Home Income Plan reverse mortgage, or shortly known as CHIP, may be able to help you reach your financial objectives.

A CHIP reverse mortgage is a loan secured at the cost of one’s home’s value. A borrower essentially gets tax-free money without the need to actually sell their property. The loan is paid back when the borrower chooses to do so or is no longer residing in the home associated with the deal. 

If you’re interested in getting a CHIP reverse mortgage, keep reading to learn the requirements, purpose, and benefits of applying for one. 

CHIP Reverse Mortgage Requirements in Canada 

The Chip reverse mortgage was designed for Canadian homeowners who use their home equity to get some extra cash for their expenses. A borrower can get up to 55% of their home’s value and can be split into monthly or annual payments. Borrowers can also get the money in one go. 

In order to get this mortgage loan, there are two sets of requirements to be eligible. One pertains to the home involved in the transaction, while another relates to the borrower.

The home used in the CHIP reverse mortgage should be the primary residence of the borrower. Along with that, the property value should be a minimum of $150,000. This is often determined by the location, the type of home, and its appraised value. 

Meanwhile, the borrower must be a Canadian resident who is 55 and older. If the property is owned by two people, both need to meet that age requirement to take out a CHIP Reverse Mortgage. Along with that, both are also required to stay on top of their regular property taxes and fees. 

CHIP Reverse Mortgage Purposes

The CHIP reverse mortgage was designed for a borrower to take out money while maintaining their current home. Discuss with your family and a mortgage agent moving forward to understand whether a CHIP Reverse mortgage is the best option for you.

Ideally, the money from this mortgage loan is used by retirees who want to enjoy retirement life, but it can fulfill a variety of purposes. The money can be used to cover debt, medical expenses, leisure expenses, and more. 

CHIP Reverse Mortgage Perks

Applying for a CHIP reverse mortgage goes smoothly because of the minimal requirements it asks for compared to other mortgage loans. Borrowers have the ability to keep the money from their loan and their home at the same time.

This can really help to provide a lot of financial freedom and security at an older age. Without any deductions or the need to consider payments or restrictions, a CHIP reverse mortgage can be a good source of money. 

Conclusion

CHIP reverse mortgage can be a really attractive loan to apply for. You get money from a little over half of the value of your own home to fund whatever you deem fit with seemingly few consequences. 

Need to discuss whether a CHIP reverse mortgage is good for you? Ottawa Mortgage Services can provide mortgage advice to home buyers and owners in Canada. Get a free assessment today!

refinance mortgage calculator

Debunking Popular Mortgage Refinancing Misconceptions

Interest rates have never been as low as they are nowadays. It’s no surprise that most, if not all, mortgage holders out there have started looking to get refinancing done. Typically, the best way is to go about reaching out to a mortgage specialist in Ottawa. 

There are several plans and multiple lenders to choose from. Before anything else, however, it’s key to be fully aware of nothing but the facts. That way, you can make informed decisions that will lead to the best mortgage refinance rates.

MYTH: Monthly mortgage costs are lowered through refinancing.

FACT: There are several reasons why someone would opt for refinancing their mortgages. This can include what kind of loan is in question, as well as the need to change existing loan terms in the first place. Sometimes, long-term loans need to be converted so that their duration is much shorter. 

In those cases, the costs in a month are higher. What happens is that when the maturity period is shorter for any loan like a mortgage, interest costs over the entire tenure can be an area for savings to be made. Adjustable vs. fixed interest rates have monthly costs that can vary. The payout for those is basically varied from case to case.

MYTH: Refinancing is done in order to get a better deal.

FACT: Multiple factors could lead someone to choose mortgage refinancing. To make sure that it’s the right step to take, a good starting point is to look at the benefits in comparison to what it would cost. Explore the probable scenarios, even the ones that may seem a little outlandish. This is particularly crucial in cases when the living duration is yet unknown, since refinancing costs involve closing fees. Should the house in question be intended for a short time only, then the projected savings from refinancing may not end up covering the full cost down the line. 

MYTH: The best choice is always fixed-rate mortgages.

FACT: No, not at all. Experts have been known to give out predictions as to interest rates and their possible directions. However, it needs to be emphasized that there’s no actual way to be fully sure of these. Given how vast the world is, anything could happen at some point at a certain place that will hold economic impact. Not to mention the numerous possible factors on the macroeconomic level. When trying to decide between adjustable rates or fixed ones, it’s crucial to know their differences. A good rule of thumb, ultimately, is to consult with a reputable advisor that has clear expertise.

Conclusion

Mortgage refinancing has been on the rise again because of the record-breaking lows that interest rates have hit these days. Given how popular mortgage refinancing has become, it’s unavoidable that some myths have become quite common. Some of these include fixed-rate mortgages being the best, refinancing as a way to get a better deal, and lowered monthly mortgage rates. Now that you know the truth behind these misconceptions, talk to a trusted agent to discuss your refinancing options.

Searching Ottawa for mortgage services you can trust? Contact Ottawa Mortgage Services today. We value transparency, honesty, and integrity in the services we offer, from refinancing and debt consolidation to pre-approval letters and services for first-time home buyers.

signing papers

The Advantages of Applying for Home Equity Line of Credit

When it comes to buying and maintaining a home, there are many ways you can achieve these goals without breaking the bank and getting broke in the process. One of these types of credit is HELOC or home equity line of credit, however, not many may be aware of what it actually means. 

If you are looking to take out a second mortgage, need extra funds for a home renovation or even for your child’s tuition, taking out a HELOC may be the right financial decision for you. This blog post will help you gain more knowledge about how this type of line of credit and how it works.

The Advantages of Applying for Home Equity Line of Credit

There are many advantages to getting a HELOC. However, it does also come with its downsides and risks. Here are some of the facts that you need to know before you apply to take out a loan like this. 

What is HELOC?

A HELOC or home equity line of credit is a revolving line of credit that will be secured against your home. If you have reached a certain amount of equity on your home, you may be eligible to use that equity to apply for a HELOC. Many people have the assumption that a HELOC is the same as a reverse mortgage, but it is not. There are many key differences between the two. In fact, HELOC isn’t a mortgage at all. Rather, it is a loan tied to your home that can be used for any purpose.

How HELOC Works in Canada

The first step to applying for a HELOC in Canada is to approach a bank or another financial institution and check with them to see if you qualify. Keep in mind that the more equity you have on your home, the larger the amount you will be able to apply for on your HELOC. 

There will be some fees that will go with the application for the HELOC such as legal fees, appraisal fees and processing fees. Also, the maximum amount of the line of credit cannot exceed 65% of your home’s appraised value. 

Why You Should Consider Applying For a HELOC

One of the key advantages of a HELOC is that the interest rates will most likely be lower than other types of loans. You will also be able to have access to extra funds and flexibility in how you spend it. You will also be able to continue living in your home while you apply and eventually pay off the HELOC. 

Conclusion

There are a few disadvantages to a HELOC. Being aware of these disadvantages before applying will help set your expectations. Keep in mind that even if you have qualified for a HELOC, the lender may reconsider their decision if you have a life-altering event that will affect your income. Also, they may have strict requirements for eligibility, so it is best to confirm this with  your mortgage agent in advance before applying. There may be additional fees that may apply in your case. 

If you are looking to apply for a home equity line of credit, come to Ottawa Mortgage Services. We specialize in setting our clients up with the loan or mortgage that fits you needs. Let us help you get what you need today!

tiny houses

What You Need to Know About Fixed and Variable Rate Mortgages

Mortgages can be a challenging topic to first-time homebuyers, especially when they aren’t well-versed in financial terms and home-buying concepts. This is why it comes with no surprise that first-time homebuyers will carry a trunkload of questions that will help them understand the mortgage process.

One of the most common questions people have regarding mortgages is the type of mortgage they should select — a fixed-rate mortgage or a variable-rate mortgage. However, don’t feel disheartened if you don’t fully understand these terms, as even the most experienced homeowners also tend to struggle with these choices.

This is why you must work with a reputable agent, such as Ghummaz Bhatti from Ottawa Mortgage Services, who can explain these concepts to you. With the help of an expert, you can make better-informed decisions when selecting the right rate based on your financial health and capabilities. 

You’re probably here because you’re one of those who scratch their heads when they need to decide on their mortgage rates. If that’s the case, you’ve come to the right place. In this article, we’ll share what you need to know about fixed- and variable-rate mortgages and why you should consider each type. Let’s take a look!

What Is the Difference Between Fixed and Variable-Rate Mortgages?

Before digging deeper into fixed-rate and variable-rate mortgages, it’s best to understand the basics of each concept. 

A fixed-rate mortgage focuses on a fixed amount of interest that you would pay for in the duration of your mortgage term. On the other hand, a variable-rate mortgage is based on the current Prime Rate. It could fluctuate, depending on the status of the market and economic climate.

Basically, fixed rates are typically connected to the world economy, whereas variable rates are linked to the Canadian economy. 

Each rate can be beneficial to a borrower, depending on your financial health and capabilities. This is why it’s crucial to seek assistance from reputable mortgage agents to ensure that you make sound financial decisions that can benefit you in the long run. 

Why Should I Consider a Fixed-Rate Mortgage?

As a first-time homebuyer, stability is your priority, and fixed-rate mortgages can give you that sense of ease when you enter a mortgage space.

The great thing about having a fixed-rate mortgage is that your payment will not change throughout your paying term, allowing you to budget your income and expenses until you pay it off. 

But when the Prime Rate drops, you may miss out on opportunities in saving money on interests. Though similarly, when the Prime Rate increases, you’ll be protected from the hike and won’t need to pay surprising fees. 

Why Should I Consider Variable-Rate Mortgages?

As mentioned earlier, variable-rate mortgages are based on the Prime Rate in Canada. This means that the interest you pay on your mortgage may fluctuate depending on the economic climate. 

When you consider variable-rate, some individuals may set standard payments based on a fixed rate, which would push their interest rate much lower, allowing them to pay more to the principal instead of paying interest. 

When the rate goes up, a person will pay more interest instead of the direct principal loan. This is why some variable-rate mortgage holders simply go with the economic flow and allow their payments to drop and rise depending on the Prime Rate. 

The Bottom Line: But Which Mortgage Rate Should I Choose?

You need to consider several factors when you’re choosing your mortgage rate, and that includes your financial health, your income, and the penalties you may experience. 

But regardless of which type of rate you’re leaning towards, it’s important to have a clear idea of your mortgage contract and finances before you sign a deal. This is where Ottawa Mortgages Services come from since they can provide you with assistance regarding your financial situation and review all the options that could lead you to make the best financial decisions. 

Why Choose Ottawa Mortgage Services?

Whether you’re a first-time home buyer or an experienced homeowner, Ghummaz Bhatti can provide you with exceptional financial assistance that can benefit you in the long run — from first-time home buying assistance, pre-approval letters, refinancing, debt consolidation, and more.

Get a free assessment or try our mortgage calculator today!

working with a mortgage agent

3 Ways a Mortgage Agent Can Help You Get Your Dream Home

Buying a home for the first time can be an incredibly exciting process. You’re finally moving into a place you can call your own, which means you can decorate it to your heart’s content. However, the process of purchasing a home is quite long and complex, especially when looking for the right mortgage to finance it.

No one wants to be saddled with enormous debt for 15 or 30 years, but unless you were born with a silver spoon, mortgages are a necessity for fulfilling your dream of homeownership. Luckily, the process doesn’t have to be arduous or difficult, mainly when working with a mortgage agent. They work with your best interest in mind and help you find the right mortgage for you, eliminating much of the stress and headaches associated with it. Here are three ways a mortgage agent can help you acquire your dream home:

1. They Help You Find the Best Deals

Mortgage agents have a vast network that will come to your advantage. With access to so many lenders and numerous deals, they can find great deals that you wouldn’t have been able to find yourself. That’s because when you approach a bank for a mortgage, it shows you only what they offer, immediately limiting your scope of the available options out there. 

Working with a mortgage agent also means filling out one application instead of multiple ones, which means avoiding further queries about your credit report. Fielding these questions can negatively impact your house hunt, adding another reason to use mortgage agents.

2. They Help You Save Time and Money

Filling out a myriad of applications is incredibly exhausting and time-consuming. It’s even more heartbreaking when you receive continuous rejections from these lenders, often making you feel like you wasted precious time completing these applications with care. Luckily, mortgage agents take the hassle and heartache out of the process by allowing you to do them all in one place. That means you don’t have to keep going back and forth between lawyers, estate agents, and underwriters since the agent will do that all for you. They also iron everything out to make sure they submit the needed documents on time, ensuring the process goes smoothly.

Mortgage agents also help you save money by finding loans that fit your financial situation best. They can connect you to interest rates and mortgage terms that make homeownership less daunting, allowing you to save thousands of dollars. 

3. They Negotiate on Your Behalf

Lastly, a mortgage agent steps in for you to negotiate with lenders on your behalf, ensuring you get the most favourable terms possible. They will analyze your financial details and develop the most strategic ways to help you save money, landing you good deals even if you have a less-than-stellar credit report. These benefits are due to mortgage agents’ extensive experience and qualifications, equipping them with the skills needed to find the solutions to their clients’ problems. They also keep themselves updated with the mortgage sector changes and the real estate market, which affect the rates and terms available on loans, helping them ensure that mortgage lenders aren’t taking advantage of you.

Conclusion

There’s a lot of paperwork and back-and-forth involved when buying a home, particularly when looking for the right mortgage to pay for it. That’s why working with a mortgage agent is so necessary; they explain the process, coordinate with other parties for you, and ensure that you find the right loan for your financial needs.

Ottawa Mortgage Services is committed to helping Canadians understand all aspects of getting a mortgage and securing the right mortgage for their situation. With our expansive network and experienced team, we can place your mortgage with the right lender best fit for you. Get your free assessment with no obligation today!

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Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) is an excellent alternative way to borrow. With a
HELOC, your home’s equity becomes collateral to provide you with a source of accessible
revolving credit. You decide how much credit you need, when you need it, then repay it when
you can. There is never a penalty to pay off your balance. A HELOC is flexible compared to a
traditional loan which is not. Once approved, a line of credit can be accessed any time, for any
amount up to your limit. With a loan, you need to re-apply every time you want more funds.
HELOCs have low interest rates (as low as Prime Rate +0.50%), making them less costly than
credit cards and personal loans.

A HELOC is an essential asset for today’s homeowner and investor– you are only charged
interest on the amount you use, not your available balance. The majority of HELOC’s include
interest-only payments and you can pay any amount towards your balance penalty free.

FTHBI

First Time Home Buyer Incentive

You are considered a first-time home buyer if you meet one of the following qualifications:

  • You have never purchased a home before
  • You have recently experienced a breakdown of a marriage or common-law partnership
  • In the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned

Under the program the maximum allowable qualifying income, before taxes and deductions, is $120,000.

What is the maximum purchase price?

To use the First Time Home Buyers Incentive (FTHBI) program the maximum purchase price is based on 4 times your annual household income (not to exceed $120,000) plus the amount you have for down-payment. The maximum purchase price cannot exceed $560,000.

What are the terms of repayment? 

The first-time home buyer will be required to repay the Incentive amount after 25 years or when the property is sold, whichever comes first. The home buyer can also repay the Incentive in full at any time, without a pre-payment penalty. Refinancing of the first mortgage will not trigger repayment.

Before selling the property, the home buyer must obtain approval of the sale from the Program Administrator.

How is repayment calculated?

If a homebuyer receives a 5% Incentive, the homebuyer will repay 5% of the home’s value at repayment.

If a homebuyer receives a 10% Incentive, the homebuyer will repay 10% of the home’s value at repayment.

Repayment is based on the property’s fair market value at the point in time where repayment is required.

Are there other costs involved with the First-Time Homebuyer Incentive?

Additional legal fees: Your lawyer is closing 2 mortgages so you may be charged higher fees.

Appraisal fees: To repay your incentive, you may need to have an appraisal done to value determine the fair market value of your home.

Other fees: Additional fees may be incurred throughout the life cycle of the incentive, like switching your first mortgage to a new lender or refinancing your first mortgage.