They say housing debts of seniors in US and UK are very alarming …
What about seniors in Canada ?
We know developers are targeting seniors as condo market in cities are dwindling … Condos are being sold at almost the same price even in middle of nowhere in Canada where land is practically “free” (not even that long ago).
Well, Canada got millions of square miles of land … We are the second largest land mass on earth.
Canada is the biggest country in the Americas, and second in the world with 3,854,082 square miles.
Anyway, First thing first, stories from the US and UK: –
U.S. REVERSE MORTGAGE SCHEME NEEDS BAILOUT
AU.S. housing agency said Friday it needs a $1.7 billion bailout from the Treasury to cover projected losses in a mortgage programs for seniors.
At issue are reverse mortgage programs, which allow seniors to borrow against their homes for everyday living expenses.
Federal Housing Administration Commissioner Carole Galante told Congress in a letter that her agency will withdraw the money from the Treasury before the fiscal year ends Monday. Congressional approval is not required. The cash infusion is the first in the agency’s 79-year history.
The agency, which insures 40 million home mortgages, is struggling with $5 billion in losses on its reverse mortgage program.
Reverse mortgage borrowers, who must be 62 or older, can take lump-sum or monthly payments. They still must pay property taxes and insurance. Sale proceeds from a home go to the lender when the borrower dies or moves out.
The FHA suffered big losses when many borrowers took large payments up-front and later ran into financial problems, often due to falling home values during the financial crisis.
MIXED REVIEWS ON REVERSE MORTGAGES
David ‘Wealthy Barber’ Chilton is not a fan of reverse mortgages. He has said they defy common sense, and can rack up debt if interest rates rise. He has more to say here.
A reverse mortgage can present challenges for a sound retirement, outlined here.
But in recent years, Canadians have taken out record numbers of reverse mortgages. Reverse mortgages can pay for home renovations, medical bills or even vacations. To learn how to help clients decide if a reverse mortgage is right for them, read more here.
And in UK …
Fear for elderly with mortgage debt
Interest-only mortgages, which allow borrowers to pay off the capital only when the mortgage term ends, have become much more thin on the ground since the boom years amid concerns about people not being able to pay back their debt.
Earlier this year, the Financial Conduct Authority (FCA) found that home owners have been failing to put enough money aside on up to half of the 2.6 million interest-only mortgages which are due for repayment over the next 30 years.
Mortgage lenders recently agreed to alert their most at-risk customers to help them avoid ” payment shocks”. Some borrowers could end up having to sell their home to pay the loan back if they do not take stronger control of their repayment planning.
The Bristol University/ILC-UK research found that nearly one in 10 (9%) households headed by someone aged in their late 60s still had a mortgage to pay off, as did one in 50 (2%) of people aged over 80.
Among everyone aged over 50 with an outstanding mortgage, the average amount still owed was £62,200. Among the over 75s, the average amount outstanding was £30,900.
At least 14% of older mortgaged households had taken on a new home loan or extended their mortgage in the last couple of years, the report found.
The research was based on the Office for National Statistics’ Wealth and Assets Survey, which looked at the economic wellbeing of households.
Read More @ http://www.express.co.uk/