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The Bank Fair launches its reverse mortgage in Quebec

by

Aurélia Morvan

June 10, 2019 09:30

Photo : Freepik

The Bank Fair offers reverse mortgages in Quebec since June 10. While the market is growing, the financial institution is the second in the country to offer such a product. “It provides another option for Quebec “, welcomes Natalie Cormier, regional director, residential mortgage loans, for the Bank’s Equitable Quebec.

The reverse mortgage is one of the solutions that are available to homeowners lack of liquidity at retirement and who does not want to have to sell their homes to fund their daily lives.

An envelope

The reverse mortgage Bank Fair is only offered by the mortgage brokers. It is addressed to Quebecers over the age of 55 owners of a residence located in a large urban center, and worth at least $ 250,000. The lent sum can represent from 15% to 40% of the value of the property. The advance is non-taxable and can be withdrawn at once or take the form of a monthly annuity.

As for the interest rate, it fluctuates between 5,59 and to 5.74 %, according to the term selected. The interest can be paid monthly or at once, at the time of repayment of the loan. The loan together with interest must be repaid in three cases : if the owner sells his property, if he moved to a residence for elderly persons or if it dies.

According to the simulator of the Bank is Fair, a person of 80 years old owner of a montreal house worth $ 400,000 and will be able to obtain a loan of $ 140,000, or 35% of the value of the property. If she dies five years after having contracted the loan, the heirs will have to repay the $ 140,000 in borrowed as well as the amount of interest accrued on the entire period of the loan, or 45 to $ 845. To pay, they will be able to sell the property. The latter has grown in value in five years, she will be able to sell to 463 710 $. After you have repaid the bank, it will remain so 277 865 $.

A market in expansion

The mortgage loan comes to fill “a need” for those who are retired or in the process of being, says Natalie Cormier. It recalls as well as 43 % of Canadians have less than $ 100,000 in savings, according to a report by pension 2019 to Mintel, and that 61 % of Quebecers are the owners of their homes. “People are living longer and want to enjoy, but they don’t have enough money. Gold, their greatest wealth, this is often their property. “

The HomEquity Bank has been the first institution to offer a reverse mortgage in Canada. Bank Fair has followed suit in February 218, when it launched its product for the reverse mortgage in Ontario, Alberta and British Columbia. It is the second financial institution to target this market in Canada. “Let’s go province by province,” says Cormier.

According to data from the Office of the superintendent of financial institutions (OSFI), the National Bank of Canada (BNC) also states an asset in this market since November 2017. When asked by the Journal of insurance, the BNC shows do not offer this product nor Quebec, nor Canada. “These data are derived from our subsidiary, Credigy, based in the United States. The latter is the acquisition of portfolios of consumer loans in which there may be reverse mortgages. It does not, in itself, this type of loan. “

The three canadian banks were accumulating an asset related to reverse mortgages of nearly $ 3.6 million in march 2019, according to OSFI. A number that has almost doubled in two years, since in march 2017, it amounted to $ 1.9 million. To this day, HomEquity Bank is concentrated in the large majority of the fund’s total assets.

 

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